Agreement resolving some China-U.S. trade conflicts takes effect
The agreement partly resolving the China-U.S. trade conflict takes effect February 14. It means some of the tariffs the two countries imposed upon one another will be either reduced or lifted.
The new coronavirus means there will likely be an extra hurdle for some importers and exporters.
When Chinese Vice Premier Liu He and U.S. President Donald Trump signed an agreement partly ending their trade battle on January 15, Trump called it, "a transformative deal that will bring tremendous benefits to both countries."
"On the basis of equality and mutual respect we have reached this phase one trade agreement," replied Vice Premier Liu.
The world's two biggest economies reached this accord on February 14 after Trump's complaints about unfair trading practices prompted him to hit China with wave after wave of punitive tariffs. Beijing retaliated with similar duties.
After reaching the provisional accord, China is buying more U.S. goods and services, while improving both market access and intellectual property protection for American companies doing business there.
In exchange, Washington is reducing and lifting some of the tariffs effectively taxing the entire volume of Chinese imports into the U.S.
For example, tariffs on $120 billion worth of goods will now be 7.5%.
But, there's a huge caveat.
Tariffs of 25% remain on $250 billion of Chinese imports, nearly half the value of Chinese goods that entered this country in 2019.
President Trump says they will only be removed if negotiations for the second phase are successful.
And if the current deal provides some trade relief, there is concern about the impact of shutdowns imposed by the new coronavirus.
Chinese banks have already provided around $57 billion of credit to help Chinese companies.
According to Anna Ashton, Director of Government Affairs at the U.S - China Business Council, “We have not heard China ask yet for any special treatment or waiver of certain deadlines because of the outbreak, but we heard [Director of the National Economic Council] Larry Kudlow and other advisers around the President suggest China will probably, at least, in the short term, struggle to reach some of its purchase commitments.”
But while China acknowledges any economic impact would spill over to other countries, it says enough is being done to minimize the fallout.