US, China sign phase one trade deal, easing tension

Pact includes agreement to buy $200B of American goods

WASHINGTON — President Donald Trump signed an initial trade deal with China on Wednesday, bringing the first chapter of a protracted and economically damaging fight with the world’s secondlargest economy to a close.

The pact is intended to open Chinese markets to more U.S. companies, increase farm and energy exports and provide greater protection for U.S. technology and trade secrets. China has committed to purchasing an additional $200 billion worth of U.S. goods and services by 2021 and is expected to ease some of the tariffs it has placed U.S. products.

But the agreement preserves the bulk of tariffs that Trump has placed on $360 billion worth of Chinese goods, and it maintains the threat of additional punishment if Beijing does not live up to the terms of the deal.

“Today we take a momentous step, one that has never been taken before with

China, toward a future of fair and reciprocal trade with China,” Trump said at a ceremony at the White House. “Together we are righting the wrongs of the past.”

The deal caps more than two years of tense negotiations and escalating threats that at times seemed destined to plunge the United States and China into a permanent economic war. Trump, who campaigned for president in 2016 on a promise to get tough on China, pushed his negotiators to rewrite trade terms that he said had destroyed American industry and jobs, and he imposed record tariffs on Chinese goods in a gamble to get Beijing to accede to his demands.

The resulting pact marks a significant turning point in U.S. trade policy and the types of free trade agreements that the United States has typically supported. Rather than lowering tariffs and other economic barriers to allow for the flow of goods and services to meet market demand, this deal leaves a record level of tariffs in place and forces China to buy $200 billion worth of specific products within two years.

To Trump and other supporters, the approach corrects for past trade deals that enabled corporate outsourcing and led to lost jobs and industries. To critics, it is the type of managed trade approach that the United States has long criticized, especially with regard to China and its control over its economy.

Rather than trying to change China’s approach, it leans into it by requiring Beijing to buy set amounts of certain goods and services.

And it does not resolve more pernicious structural issues surrounding China’s approach, particularly its pattern of subsidizing and supporting key industries that compete with U.S. firms, like solar and steel. U.S. businesses blame those economic practices for allowing cheap Chinese goods to flood the U.S. market, putting domestic firms out of business.

But the agreement has plenty of critics in both parties, who say that Trump’s tactics have been haphazard and economically damaging and that the agreement leaves many important economic issues unresolved.