US and China prepare to sign phase one trade deal but key issues remain unresolved

A phase one trade deal will today be signed between China and the US in Washington, an agreement that will

china us phase one deal sign

Photo: Mark Schiefelbein/AFP

A phase one trade deal will today be signed between China and the US in Washington, an agreement that will temper bilateral tensions but postpone addressing crucial disagreements between the world’s two largest economies.

The deal obligates China to increase the value of imports from the US to $200 billion over two years, a large part of which will be from agricultural products. US tariffs of 25% will remain on $250 billion worth of Chinese imports, while the tariff rate on another $120 billion of products will drop to 7.5%.

The most difficult issues—including how intellectual property is dealt with in China, as well as Beijing’s subsidies to Chinese companies—will not be covered by the deal sign today. Between President Donald Trump’s impeachment trial and the US election, Beijing is in no rush to address structural demands with a potential one-term president. Meanwhile, Trump is likely unwilling to reignite the trade war and risk economic repercussions before November’s election.

Expect tensions to continue to boil below the surface of the phase one trade deal. Trump has already acknowledged that the phase two deal will not be signed before US elections. In the meantime, competition over 5G infrastructure and China’s global investments will continue to define the relationship.

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