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US and China sign new deal


Representatives from the two countries have signed an agreement aimed at easing a trade war that has disturbed the global markets and is impacting the global economy. However, many fear this won't stop the tensions

US President Donald Trump reacted saying the new deal was "righting the wrongs of the past". According to the US President this deal will deliver "a future of economic justice and security for American workers, farmers and families" and has the power to be "transformative" for the US economy. On the Chinese side, this deal is being called as a "win-win" deal, with the potential to foster better relations between the two countries.

Following this, the Office of the United States Trade Representative (USTR) has announced the implementation date for the reduction of tariffs from 15% to 7.5% on List 4 (a) also known as Annex A of the 20th of August 2019 notice. The reduction will take place at 12:01 am Eastern Standard Time (EST) on the 14th of February 2020.

Further details of the US-China Phase One Agreement Text can be found HERE

Matt Priest, President and CEO of the Footwear Distributors and Retailers of America, commented on the signing of the agreement: “We are pleased to see the first round of negotiations coming to a close in the signing of the Phase One agreement today. While it does not remove all the punitive tariffs the Trump Administration has levied against American companies and consumers, it will provide a little more certainty as we start the new year, which is key to job growth and retail price stability for shoe consumers. Tariffs raise costs on consumers, and shoe tariffs hurt working families the most. That is why we have said tariffs on shoes should not be used as a weapon in this continuing trade war. Even with the removal of some of these duties, footwear tariffs will still average 12.2% with up to 67.5% on certain kids’ shoes. A dynamic US trade policy would not just reduce tariffs back to pre-Trump Administration rates but would actually trim them further to spur economic growth and consumer buying power. This is a story we are preparing to tell policymakers in Washington, D.C. as we go back on the offensive in 2020.”

Despite the recognisiton of the positive step the signature of this deal represents, the markets fear that tensions between two of the world's biggest economies will continue as China and the US will now enter a second round of trade talks which are expected to be more difficult than the "phase one", now concluded with the deal signed yesterday. By the end of the day, the two sides are keeping substantial tariffs in place.

Image credits: Chris Liverani on Unsplash
 
 
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