In a historic moment, a Phase One Trade Agreement was signed on January 15, 2020, between China and the United States, shining a positive light on the ongoing trade war between the two economic powerhouses. The United States stated that the 94-page document is just the beginning of a broader agreement that will likely be signed in multiple sections, which will address various sticking points – including Intellectual Property, Technology Transfer, Currency and Agriculture.
A formal notice should be issued in the Federal Register within the next few days, reducing List 4 goods from 15 percent to 7.5 percent. The 25 percent tariffs currently being collected on Lists 1, 2 and 3 Imported Chinese goods will remain at this time, and China does not plan to lift its retaliatory tariffs on U.S. goods in the near future as preparation begins for Phase Two of the Agreement.
An additional positive from this agreement is China’s agreement to purchase $200 billion of U.S. products, an increase over the $185 billion in total goods and services China imported in 2017 before the trade war began. Agricultural items, such as soybeans, pork, cotton and wheat exports to China, are slated to increase in 2020, as well as energy, services and manufacturing.
Today, January 16, 2020, the U.S. Senate passed the United States-Mexico-Canada Agreement (USMCA) after an 89-10 vote. This agreement will replace the North American Free Trade Agreement (NAFTA), which came into effect on January 1, 1994, eliminating virtually all duties and tariffs between the three countries.
The enactment of the USMCA will revise trade rules concerning agriculture, manufacturing and services. Senate Majority Leader Mitch McConnell stated that the USMCA is “a major step for our whole country.” Once signed by U.S. administration, only Canadian approval is needed for the agreement to take effect.