Global economy hopeful as US, China Sign Phase 1 of Trade Deal to Ease Cold War

GLOBAL – US President, Donald Trump, has signed a trade agreement with Chinese vice president Liu He aiming at easing the escalating trade tensions between the two countries.

The current impasse between the the two counts is as a result of the US imposing high tariffs on Chinese goods.

The terms of the agreement engage China to boost purchases of US goods and services by US$200 billion over two years.

The US, in exchange, pledged to reduce by half the amount of tariffs it has imposed on Chinese products.

Chinese leaders called the agreement a ‘win-win’ deal that would help foster better relations between the two largest economies in the world.

Although the two countries have tackled the first phase through coming to an agreement, there is still plenty to discuss with many unsolved issues.

“Together, we are righting the wrongs of the past and delivering a future of economic justice and security for American workers, farmers, and families,” Trump said at the White House alongside the U.S. and Chinese officials.

Meanwhile, the Chinese vice president hailed his country’s economic progress, saying that “China has developed a political system and a model of economic development that suits its “national reality.”

“We hope both sides will abide by and keep the agreement in earnest,” the vice president added.

If any of the parties fail to live up to the agreement terms, the deal will be broken.

The first phase of the agreement lifts US tariffs on Chinese-made cell phones, toys, and laptops in addition to halving the current tariff rate to 7.5% on US$120 billion worth of other Chinese goods, including flat-panel televisions, Bluetooth headphones, and footwear.

Tariffs of up to 25% will, however, remain imposed on an estimated US$360 billion of Chinese goods.

China, in turn, is expected to maintain the majority of the tariffs it has imposed on US$100 billion worth of US products.

Tensions between the two countries date back to 2 years ago when Trump accused China of unfair trade practices, accusing the country of “raping” the US and perpetuating “the greatest theft in the history of the world.”

China offers subsidies to industries including steel and solar panels companies allowing them to dominate their respective markets with cheap exports.

The world’s second-largest economy, China, however, rejected a call to include a pledge not to hack US companies, arguing such a promise was not part of a trade deal.

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