U.S. President Donald Trump and Chinese Vice Premier Liu He will sign an initial trade deal on Wednesday that will roll back some tariffs and see China boost purchases of U.S. goods and services, defusing an 18-month conflict between the world’s two largest economies.
Liu said the two sides will work more closely together to obtain tangible results and achieve a win-win relationship despite differences in their political and economic models, China’s official Xinhua news agency reported on Wednesday.
U.S. officials called the deal a huge win that marked a significant shift in Washington’s relations with China, but said it included a tough enforcement measure that could trigger renewed tariffs if Beijing does not live up to its promises.
The Phase 1 agreement caps a trade war marked by tit-for-tat tariffs that has hit hundreds of billions of dollars in goods, roiling financial markets, uprooting supply chains and slowing global growth.
Some analysts and economists have questioned whether the outcome of the drawn-out talks justified that economic pain.
Trump and Liu, who led the Chinese side in the trade talks with Washington, are scheduled to sign the 86-page Phase 1 deal at a White House event at 11:30 a.m. EST (1630 GMT) before over 200 invited guests from business, government and diplomatic circles.
It is not clear at this time whether the entire document will be released on Wednesday.
Trump, who entered the White House in 2017 vowing to rebalance global trade in favor of the United States, has already begun touting the deal as a pillar in his 2020 re-election campaign, calling it “a big beautiful monster” at a rally in Toledo, Ohio last week.
“Our farmers will take it in. I keep saying, ‘Go buy larger tractors, go buy larger tractors,’” Trump said.
The centerpiece of the deal is a pledge by China to purchase an additional $200 billion worth of U.S. farm products and other goods and services over two years. That will help reduce the bilateral U.S. trade deficit in goods, which peaked at $420 billion in 2018. The United States had a small services trade surplus with China of $40.5 billion in 2018.
Top White House economic adviser Larry Kudlow told Fox News the agreement would add 0.5 percentage point to U.S. gross domestic product growth in both 2020 and 2021.
Kudlow said the deal called for China to buy an additional $75 billion worth of U.S. manufactured goods over the two-year period. A source told Reuters this week that would include aircraft, autos and car parts, agricultural machinery and medical devices.
Beijing will boost energy purchases by some $50 billion and services by $40 billion, mostly in the financial sector, Kudlow said.
The Reuters source said agricultural purchases will get a $32 billion lift over the two years, compared to a 2017 baseline of U.S. exports to China.
When combined with the $24 billion in 2017 farm exports, the $16 billion annual increase approaches Trump’s goal of $40 billion to $50 billion in annual agricultural sales to China.
China will significantly increase imports of U.S. soybeans after the Phase 1 deal is signed, the Global Times reported on Wednesday, citing comments from a senior Chinese economist at a state think tank.