On Dec 12, 2019, morning, Trump tweeted that the US is “getting very close to a big deal with China. They want it, and so do we!” This indicates that the US reaches a trade deal in principle with China and comes very substantially on the “Phase One “deal. The US and China agree on economic relations which are not only good for the US or China but also for the world economy. The market will go up incredibly with the deal.
The US and China trade deals have two to three phases. In Phase one deal china has to purchase agriculture goods worth $40 bn to $50 bn along with energy and other goods, in exchange US would reduce tariff on Chinese imports by 50% and suspended new tariffs scheduled to go into effect on Dec 15 to secure a “Phase One” trade deal. The phase one deal also has an agreement on transparency in forex. The currency and forex agreement have tremendous benefits in terms of magnitude and simplicity of trade between the two nations.
The phase two of the deal will start immediately after the agreement on phase one deals with progress on technology transfer and negotiations on intellectual property. However Chinese officials want to wait to see if Trump wins a second term, before U.S elections they don’t want to discuss a phase two deal.
Trade agreements can create opportunities for Americans and help to grow the U.S. economy. The Chinese economy is more export sensitive than the US. The global economy needs China’s economy to pick up and improve its trade relationship with the US. This will be going to happen very soon, and it is likely that other trade partners will open up the door for them.