The U.S. and China signed what they billed as the ‘first phase of a broader trade pact’ on Wednesday.
It was signed amid persistent questions over whether President Donald Trump’s efforts to rewrite the economic relationship with Beijing will ever go any further.
The deal commits China to do more to crack down on the theft of American technology and corporate secrets by its companies and state entities, while outlining a $200 billion spending spree to try to close its trade imbalance with the U.S.
It also binds Beijing to avoiding currency manipulation to gain an advantage and includes an enforcement system to ensure promises are kept.
The ceremony at the white house, included Trump, dozens of American business people, U.S. lawmakers and Chinese officials. It also marked a rare moment of friendship lately between the world’s two largest economies.
The U.S and China have been increasing tariffs, on goods traded between the nations. It lead to resulting increase in import taxes on over £350bn worth of goods. It also lead to disrupting global trade flows in the process and hampering global economic growth. The hike in taxes also increased uncertainty for investing in the other country.
The deal doesn’t concludes the trade war as most of the recently introduced tariffs are still in place.
However, it begins de-escalation of trade tensions as the talks enter their next phase.
President Trump said the new agreement will be “transformative” for the USA. The Chinese leaders have called it a “win-win”, though both were keen to assert that is a “phase one” agreement.
The US administration will be looking to continue negotiating with China on a range of trade issues, including its state subsidies on key industries like agriculture and red tape preventing US firms from operating in the country.
Donald Trump has also said that by maintaining the majority of its tariffs , it will help to provide the U.S with leverage in future trade talks