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U.S. and China Reach Agreement for “Phase One” of a Trade Deal

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President Trump announced today that the U.S. has come to a “very substantial phase one deal” with China. After 14 formal negotiation sessions, which have lasted over 15 months, today it was announced that the two superpowers have reached a basic agreement regarding parts of the trade disputes.

Although a basic agreement has been reached, phase one of the trade deal itself will now be put to paper over the next three weeks, this according to President Trump. The president also said that, “When the deal is fully negotiated, I sign it myself on behalf of our country. Fasting and clean!”

Once written it will be signed by both President Trump and President Xi Jing of China. Based on statements made today by our administration this agreement that both countries have covered a wide range of issues between our two countries.

While our administration has labeled the negotiations held over the last two days as a deal which has been reached for phase one, the Chinese delegation have been labeling this as a pause in the trade war.

Unquestionably there is a difference in the definition of what has been accomplished over the last two days by the United States and Chinese negotiators. What is clear is that according to Treasury Secretary Stephen Mnuchin the White House has scrapped a new round of tariffs on imports of Chinese goods which were set to go into effect on October 15th. Although the announcement does not have any bearing on a separate set of tariffs hikes set to begin on December 15th or on the tariffs put in place in September.

The Devil is in the Details

While it is clear that the Chinese were able to accomplish one of their primary objectives regarding tariffs that were set to be enacted in four days, what is unclear are the details of the concessions and agreements made by China regarding intellectual property. This by no means diminishes any real progress made over the last two days, however until the details as to what concession regarding the transfer of intellectual property, financial services and agriculture is revealed, my optimism will remain guarded.

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Wishing you as always, good trading,

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