Trump announces a partial trade agreement with China "very important"

(Washington) Donald Trump announced Friday a partial but "very important" trade deal with China, a rare good news that the US president, beset and criticized from all sides, needed.

Christophe VOGT
France Media Agency

"We have reached a very important phase 1 agreement," he told reporters in the Oval Office after meeting with Liu He, China's chief negotiator, along with US Treasury Secretary Steven Mnuchin. and US Trade Representative Robert Lighthizer.

"There was a lot of friction between China and the United States, now it's love! He said, not hesitating to discuss the impact on "peace in the world" of this new agreement between the first two world economies.

To handle the hyperbole, the president, who seeks a second term, still keeps his feet on the ground and has commented at length on the substantial agricultural purchases granted by Beijing and to benefit a part of his electorate.

In return, China has obtained that Trump waives the 25-30% increase in punitive tariffs on $ 250 billion of Chinese imports into the United States, which was to take effect on Tuesday.

However, the terms of the negotiations still have to be written down on paper. A process that, according to the host of the White House, could take four to five weeks.

He has not ruled out signing, "or not," a document with Chinese President Xi Jinping in Chile on the sidelines of the Pacific Rim Association summit in November.

Two other phases, with very vague outlines, could then follow to complete this first agreement.

Mr. Mnuchin, who was speaking to the president, was cautious. "We have a fundamental agreement on the key points. We have made a lot of progress, but we still have work to do, "he said. "We will not sign an agreement until we can tell the president that everything is on paper."

"Buy tractors"

This phase 1, according to Trump, includes purchases of agricultural goods for 40 to 50 billion dollars a year. It is about two and a half times the peak of China's annual purchases. In 2017, it imported $ 19.5 billion worth of US agricultural products, a number that fell to just over $ 9 billion in 2018 as a result of the trade war.

"I'm now recommending that our farmers buy more land and bigger tractors" to meet rising demand, the president joked.

Farmers have been particularly targeted by Chinese retaliation. The Trump administration had to release $ 28 billion in federal aid to mitigate their losses.

Politically, Donald Trump is under pressure as never since entering the White House. Democrats have launched an investigation into the impeachment process, which appears to be supported by voters according to several polls. And his political disorder in Syria earned him very virulent criticism even among his closest supporters.

The agreement reached Friday with China also includes elements on intellectual property – a right often violated in China -, greater openness of the Chinese financial services sector and a component on exchange rates.

The Chinese negotiator spoke of "substantial progress in many areas". "We are happy," Liu He added, hinting that the discussions would continue.

On the other hand, no decision has been taken on the 15% tariffs on consumer products which are due to come into force in December.

Impact on global growth

The main Wall Street indexes ended up sharply higher, even though they fell back slightly when the first details filtered out.

"We've been waiting all day for details on this deal (…) and the little that emerges seems to be more limited than expected," said Christopher Low of FTN Financial.

"Nevertheless, this is very good news and the earnings of the day are added to those garnered the day before in the anticipation of this announcement," he added.

The fate of the Chinese telecoms group Huawei, which the United States has heavily sanctioned, accusing it of collaborating with the Beijing intelligence services, is not part of the agreement.

The trade war between Washington and Beijing is affecting the entire global economy.

The International Monetary Fund recently estimated that trade tensions and their side effects, such as the investment freeze or disruptions in international supply chains, would cut global GDP by $ 700 billion by 2020, the only equivalent of the Swiss economy.