But despite recent expressions of frustration with the pace of negotiations by President Trump, Chinese sources still believe he very much cares about striking a first phase deal with China soon, and continue to believe, despite Commerce Secretary Wilbur Ross’ warnings to the contrary, that they have assurances the threatened December 15 tariffs will not be imposed if there is progress, but still no deal, by then.
As to the remaining hurdles to a deal, Chinese negotiators reiterate that the US must agree to roll back current tariffs in a trade agreement, and not just avert the upcoming tariffs scheduled for December 15. This rollback could be in several stages (presumably starting with last September’s tariff hikes), but however it is presented, Beijing wants a path to seeing all tariffs removed if the US is to “show sincerity” on its negotiating side.
Indeed, the complication for Beijing is that while President Trump has attempted to pull China into concrete commitments to multiple years of (unrealistically) ambitious agricultural purchases in this “phase one” agreement, there is no assurance in reality there will ever be a “Phase Two” to address some of China’s concerns about the existing tariff regime. So Beijing, we believe, has doubled down in pushing for a roadmap, at least, for the removal of all tariffs in this round.
All said, sources in China remain “cautiously optimistic” a phase one deal can be signed, but as we have written, not by December 15, but perhaps, if all goes well, they now expect it could happen before the advent of the Chinese New Year, on January 25 of next year.
Stocks were little changed on Friday after China and the U.S. agreed to a phase one trade deal as investors concluded a solid week of gains.
The trade deal will include a rollback of some of the China tariffs and halts additional levies set to take effect on Sunday. China agreed to significant purchases of U.S. agricultural products, but the amount is below what the White House was reportedly pushing to get. On the U.S. side, investors were hoping for more than just a partial rollback of some tariffs.
The Dow Jones Industrial Average ended the day just 3.33 points higher at 28,135.38. The S&P 500 closed just above the flatline at 3,168.80 while the Nasdaq Composite gained 0.2% to 8,734.88. Earlier in the day, the major averages hit record highs.
U.S. Trade Representative Robert Lighthizer said China will buy $40 billion in U.S. agricultural goods. That’s below the $50 billion Trump was reportedly looking for. He also said both sides are aiming to sign the agreement in January.