Dec 14, 2019 07:06 UTC
  • This AFP file photo taken on November 28, 2019 shows containers stacked up at an automatic dock in Qingdao in China.
    This AFP file photo taken on November 28, 2019 shows containers stacked up at an automatic dock in Qingdao in China.

The United States and China have announced a “Phase one” trade agreement that reduces some US tariffs in exchange for what US officials said would be a large increase in Chinese purchases of American farm products and other goods.

“We have agreed to a very large Phase One Deal with China," US President Donald Trump tweeted on Friday after officials in Beijing made a similar announcement.

"I think in agriculture they will hit $50 billion," and take effect "pretty soon," Trump told reporters at the White House.

A signing of the deal at ministerial level is expected for "the first week of January," a senior Trump administration official told reporters.

The US has agreed to suspend tariffs on $160 billion in Chinese-made cell phones, laptop computers and other consumer goods due to go into effect on December 15. Existing tariffs on $120 billion of other goods such as smart speakers and Bluetooth headphones would be cut to 7.5%.

In return, US officials say, China is committing to increasing purchases in four sectors: agriculture, manufacturing, energy, and services.

Purchases will hit "at least $200 billion dollars over the next two years," the administration official explained, on condition of anonymity.

China has also agreed to suspend retaliatory tariffs, targeting goods ranging from corn and wheat to US made vehicles and auto parts, that were due to take effect December 15.

“To me it’s an enormously important first step in our relationship,” US Trade Representative Robert Lighthizer said.

Friday’s deal includes specific commitments on intellectual property, technology transfer, agriculture, financial services, currency, and foreign exchange, Lighthizer said.

The deal will provide more protection for foreign companies in China and Chinese companies in the United States, Chinese officials said.

Though investors were relieved to see Sunday's threatened tariffs removed, US stock markets didn't appear to like the deal much.

Critics say the deal falls well short of the demands Trump issued when he launched a trade war against Beijing 17 months ago.

A "phase two" trade deal between the United States and China seems less likely, according to officials, lawmakers and trade experts from both countries.

In a sign that tensions remain high, Foreign Minister Wang Yi said earlier Washington was "suppressing" China in a number of fields, including the economy, trade and technology and had "seriously damaged the foundation of hard-earned trust between China and the US."

Washington has also angered Beijing by backing Hong Kong's pro-democracy movement and criticizing China's mass detention of mostly Muslim minorities in the northwest region of Xinjiang.