China to ramp up U.S. buys under trade deal, but skeptics question targets

WASHINGTON, (Reuters) - China has pledged to buy almost $80 billion of additional manufactured goods from the United States over the next two years as part of a trade war truce, according to a source, though some U.S. trade experts call it an unrealistic target.

Under the trade deal to be signed today in Washington, China would also buy over $50 billion more in energy supplies and boost purchases of U.S. services by about $35 billion over the same two-year period, the source told Reuters late on Monday.

The Phase 1 agreement also calls for Chinese purchases of U.S. agricultural goods to increase by some $32 billion over two years, or roughly $16 billion a year, said the source, who was briefed on the deal.

When combined with the $24 billion U.S. agricultural export baseline in 2017, the total gets close to the $40 billion annual goal touted earlier by U.S. President Donald Trump.

The deal does not include an agreement for a future reduction in tariffs on Chinese goods, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said in a statement Tuesday afternoon, refuting a Bloomberg news report.

“The only non-public component of the agreement is a confidential annex with detailed purchase amounts,” the statement said.

The deal terms are expected to be announced at Wednesday’s 11:30 a.m. EST White House signing ceremony between Trump and Chinese Vice Premier Liu He. It could defuse tensions between the world’s two largest economies, just as the U.S. Senate prepares to begin its impeachment trial of Trump.

China’s alleged commitments represent a staggering increase over 2017 imports of U.S. goods and services of $186 billion, raising questions about how realistic they are.

U.S. stocks hit intra-day record highs on Tuesday before turning negative on the Bloomberg report, which said the United States would likely maintain the tariffs until after November’s presidential election.

New data also show that the costs of Trump’s trade wars are proving more widespread, deeper and longerlasting to American manufacturing competitiveness and jobs than previously believed.

Lighthizer on Monday called the deal a “huge step forward” for U.S.China trade relations and “a really, really good deal for the United States.” He told Fox Business that Beijing’s compliance would be monitored closely.

Lighthizer and his counterparts from Japan and the European Union on Tuesday also took aim at Chinese subsidies that they say are distorting the worldwide economy, proposing new global trade rules to address such practices.