The U.S. and China Agree to Cancel Existing Trade Tariffs in Phases

The United States and China, the world’s two largest economies, have gone back and forth imposing tariffs on each other’s goods since early 2018. Placing tariffs on billions of dollars’ worth of goods has battered the financial market and caused negative sentiments for both businesses and consumers. 

Fortunately, there does seem to be light at the end of the tunnel. On Thursday, November 7, Beijing and Washington D.C. agreed to lift existing trade tariffs between the two nations in phases. A spokesperson for China’s Commerce Ministry, Gao Feng, stated that both sides had agreed to simultaneously cancel some existing tariffs on one another’s goods. 

The U.S. and China have been partaking in constructive negotiations over the past two weeks and as a result, both sides are closer to a “phase one” trade agreement. Furthermore, Feng did mention an important condition for a limited trade agreement: the U.S. and China must remove the same amount of charges at the same time. 

U.S. Stock Index Futures on the Rise

U.S. stock index futures increased Thursday morning, due to renewed hope towards a phase one trade accord. Dow futures are now poised to open up more than 120 points. Washington D.C. and Beijing mentioned progress being made during talks late last week, prompting market participants to believe the two counties would sign a deal later this month.

However, Reuters, an international news agency, reported on Wednesday that a meeting between President Trump and Chinese President Xi Jinping may be delayed until December. This would postpone the opportunity for the two leaders to sign an interim trade deal. 

The Trump Administration has been particularly focused on wanting Beijing to curb massive subsidies to state-owned companies and stop the forced transfer of American technology to Chinese firms. However, analysts are skeptical that a phase one trade deal will resolve such an issue. They believe the two economic powers will require a more comprehensive agreement before a sustainable increase in market sentiment will occur.

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