- President Donald Trump signed an interim trade agreement with China on Wednesday.
- The move was the first tangible sign of de-escalation in a trade dispute that has weighed on the world’s largest economies for nearly two years.
- Ahead of his 2020 reelection bid, Trump has portrayed his economic wars as major wins for American business.
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President Donald Trump signed an interim trade agreement with China on Wednesday, portraying it as a major win for American business ahead of his 2020 reelection bid. The move marks the first tangible sign of de-escalation in a trade dispute that has rattled the world’s largest economies for nearly two years.
“As a candidate for president I vowed strong action — it’s probably the biggest reason I ran for president,” Trump said in a freewheeling speech alongside Chinese Vice Premier Liu He in the East Room of the White House. “I more than kept my promise. Now our efforts have yielded a transformative deal that will bring tremendous benefits to both countries.”
The so-called phase-one deal has been widely welcomed by companies, investors, and policymakers, who have warned that punitive tariffs have upended global supply chains through higher costs and cast deep uncertainty on business plans. But it only marked the start of negotiations to defuse a broader economic standoff between the two sides.
As part of the phase one-agreement, which was announced late last year, the Trump administration agreed to reduce a portion of tariff rates for China if it adjusted some of the ways it manages its state-run economy.
The White House has said the 86-page text would include commitments from China on American agricultural purchases, tighter intellectual property protections, increased scrutiny of currency movements, and a more open financial sector. Previously undisclosed details of the agreement were set to be released on the day of the signing ceremony.
But critics were swift to question whether those concessions were enough to justify the costs that have piled up from tariffs, which researchers recently concluded fell almost entirely on Americans.
“By now we should recognize this as the usual Trump process: create chaos, end chaos, declare a great victory,” said Jared Bernstein, a senior economist in the Obama administration. “In reality, there’s no victory here, just some squishy, minor promises from China, unnecessarily disrupted trade flows, and assorted pain for no gain.”
Trump was also met with pushback from unlikely critics who said the phase-one deal left out economic aggressions at the center of a Section 301 investigation that ignited the dispute. A second round of negotiations could address those issues, including large-scale subsidies China provides to companies.
In the meantime, tariffs are likely to remain on thousands of products. The Trump administration has agreed to lower tariffs on $110 billion worth of products targeted in September, but tariff rates of separate tranches a total trade value of roughly $250 billion will remain the same.
Trump suggested Wednesday that those tariffs would be lifted following a phase-two deal with China, which he has said was unlikely to be finalized until after the November election. However, it was unclear whether tariff rollbacks had been officially agreed upon.
“There is no agreement for future reduction in tariffs,” Treasury Secretary Steve Mnuchin and US Trade Representative Robert Lighthizer said in a joint statement to Business Insider on Tuesday.
In a letter to Trump this week, Alliance for American Manufacturing president Scott N. Paul said that “nearly all the major structural issues” were unresolved. The factory group has supported tariffs and opposed a process designed to allow some companies to receive exemptions from them.
“For American manufacturing and its workers, the phase one agreement is completely inadequate,” Paul said. “The agreement does not level the playing field for American workers in the US or global market.”