President Trump Announces Phase One Deal with China, Suspends Tariff Increase

After meeting with Chinese officials on October 11, 2019, President Trump announced his administration had reached a limited Phase I trade deal with China, largely maintaining the status quo and preventing future escalation. While negotiators have yet to put pen to paper, both sides hope to have a document ready for signature by President Trump and President Xi of China at the November 12-14 Asia Pacific Economic Cooperation (APEC) meetings. Both sides indicate that if they sign Phase I, they will immediately move forward negotiating a broader Phase II deal.

President Trump also announced he would suspend the tariff increase of 25 to 30 percent on more than 7,000 Chinese goods that was slated to take effect October 15. The President, however, stated he was undecided about implementing another round of tariffs on $125 billion of mostly consumer goods from China set to take effect on December 15. If the Phase I deal is not signed next month, those deals likely will still go into place. The agreement falls short of the grand bargain that PMA, through its One Voice advocacy partnership with NTMA, has long called for but does begin to address Intellectual Property theft, though not forced technology transfer or state subsidies by China.

Conflicting reports have emerged over whether the United States will lift its designation of China as an illegal currency manipulator, an action taken over the summer and supported by One Voice. Sources indicate the Chinese politburo is less enthusiastic about the deal and not fully committed to the structural changes long sought by manufacturers. One Voice will continue to work with government negotiators to address the structural changes necessary in China to level the manufacturing playing field.

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