By Lingling Wei in Beijing and Alex Leary and Andrew Restuccia in Washington
The U.S. and China have reached a preliminary agreement in their
long-running trade war, President Trump and China's Vice Minister
of Commerce Wang Shouwen said in separate statements Friday.
Mr. Trump tweeted that the two sides had agreed "to a very large
Phase One Deal with China," adding that the 25% tariffs on Chinese
imports would remain but that the 15% levies on other goods would
be cut in half.
A new round of tariffs slated to take effect on Sunday will not
go into effect, Mr. Trump said, citing Friday's agreement, adding
that the two countries would immediately begin negotiations on more
contentious issues.
"This is an amazing deal for all. Thank you!" he tweeted.
In Beijing, Mr. Wang said only that the U.S. would remove its
tariffs in stages, declining to disclose details on the scale of
the tariff reduction or of its purchases of U.S. farm products.
Mr. Wang said that the agreement would cover a range of
contentious issues, including agriculture, intellectual property
protection, technology transfer and liberalization of the financial
sector, without elaborating.
Mr. Trump, in his tweet, also mentioned energy and manufactured
goods, "plus much more," without offering further details.
Mr. Wang said that the deal would need to first go through
"legal procedures" in both countries before it is signed.
In Washington, U.S. Trade Representative Robert Lighthizer said
the deal "achieves meaningful, fully-enforceable structural changes
and begins rebalancing the U.S.-China trade relationship."
"This unprecedented agreement accomplishes those very
significant goals and would not have been possible without the
President's strong leadership," Mr. Lighthizer said.
Mr. Trump on Thursday approved a so-called phase-one pact
scaling back tariffs on Chinese imports and eliminating the new
levies in exchange for a written pledge from Beijing to buy tens of
billions of dollars worth of U.S. farm products, among other
concessions.
At an earlier news briefing, Foreign Ministry spokeswoman Hua
Chunying had referred only to how news of the agreement helped fuel
a surge in U.S. and European stocks, but didn't confirm the
existence of a deal.
Mr. Trump is vulnerable to criticism from China hawks who have
advocated a hardened stance toward Beijing. Chinese President Xi
Jinping, meanwhile, faces an increasingly tricky balancing act of
his own, as he seeks to stabilize a wobbly bilateral relationship
without appearing to give in to U.S. pressure.
Ensuring what senior leaders have described as a "balanced"
agreement has been a priority for Chinese negotiators throughout
the process. Beijing walked away from a nearly completed deal in
early May because the leadership felt that the text of the
agreement was too lopsided in Washington's favor. That led the
Trump administration to ramp up its trade war with China, putting a
drag on the world economy.
Though Beijing sees the benefit in wrapping up a deal as quickly
as possible this time around, it still wants to ensure that China
doesn't appear to have been pressured into making all the
concessions. The perception of a one-sided agreement could subject
Mr. Xi to criticism from within the ruling Communist Party and
other parts of the society, Chinese officials fear.
Having taken control over all the levers of power in China, Mr.
Xi has staked his credibility and popularity in large part on his
image as someone willing and able to stand up to foreign pressure.
During the protracted trade battle with Washington, Chinese
officials say, he has consistently directed his lieutenants to
strike back at tariff increases imposed by the Trump
administration.
Following the collapse of trade talks earlier this year, Chinese
state media was also instructed to speak out aggressively against
what was described as American hegemony.
By the time U.S. and Chinese negotiators renewed discussions in
October with the near-term goal of reaching a limited deal centered
around agricultural trade, officials say, Mr. Xi was eager to
strike a deal to help alleviate pressure on the Chinese economy,
which faces a variety of challenges. Yet he hasn't given up his
desire to claim victory.
A U.S. proposal made in the past week, reported by The Wall
Street Journal early Thursday, appeared to offer an opportunity for
both leaders to walk away with a win. Under the proposal,
Washington would slash existing tariffs by as much as half on
roughly $360 billion of China-made goods, in addition to canceling
fresh tariffs on $156 billion in Chinese goods that Mr. Trump had
scheduled to kick in on Sunday.
In return, China would guarantee purchases of large quantities
of American merchandise, especially soybeans, poultry and other
farm products. The U.S. side would also have the right to bump
tariff rates back up to their original levels again should China
fail to carry out its pledges as part of the deal.
Michael Pillsbury, a Trump adviser, said Thursday that the deal
calls for China to buy $50 billion of U.S. agricultural goods in
2020, along with energy and other products. In exchange, he said,
the U.S. would reduce the tariff rates on many Chinese imports,
which now range from 15% to 25%. He confirmed that the deal would
include a "snapback" provision that would restore the original
tariff rates if Beijing fails to make the agreed-upon
purchases.
During recent discussions, however, Chinese negotiators have
been reluctant to commit to the promised purchases of U.S. goods
and have instead insisted on a clause that would allow China to
reimpose tariffs on U.S. products should Washington fail to follow
through on its tariff-reduction promises.
"The U.S. side often complains that China doesn't follow through
on its promises," said one Beijing official involved in economic
policy making. "Well, we don't always trust them, either."
Bingyan Wang contributed to this article.
Write to Lingling Wei at lingling.wei@wsj.com, Alex Leary at
alex.leary@wsj.com and Andrew Restuccia at
Andrew.Restuccia@wsj.com
(END) Dow Jones Newswires
December 13, 2019 11:25 ET (16:25 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.