China agreed to buy $200 billion of US products over the next two years as part of a “phase one” trade deal signed by President Donald Trump on Wednesday, CNN reports.
Beijing agreed to greatly ramp up its spending on American goods and services in exchange for Trump agreeing to reduce tariffs on $120 billion in Chinese products from 15% to 7.5%.
Under the deal, China would increase US imports to $260 billion this year and $310 billion next year.
But analysts expressed skepticism about the numbers.
"We think it is highly challenging for China to import $200 billion more goods and services from the US over the next two years without reducing imports from elsewhere," said analysts at UBS.
US will maintain tariffs:
Despite the deal, the US will keep its 25% tariff on about $250 billion of Chinese goods that are primarily used by manufacturers. The 7.5% tariff will apply to consumer goods like clothing and electronics.
China will also maintain the retaliatory tariffs it imposed on $110 billion worth of American products, but agreed to issue waivers for specific goods.
US Trade Representative Robert Lighthizer told Politico that the US may reduce tariffs in the second phase of the deal.
Along with its pledge to buy more products, China also agreed to reduce restrictions on agricultural imports from the US and will impose criminal penalties for copyright theft.
Deal includes an out clause:
Lighthizer told Politico that the deal also includes a mechanism for resolving disputes if either country fails to comply with the agreement.
“If the issue cannot be resolved at lower government levels, the dispute can be escalated up the chain of command until it reaches the desks of Lighthizer and his designated Chinese counterpart,” Politico reported.
If the two sides still cannot come to an agreement, the complaining country can respond by “by suspending an obligation under this agreement, or by adopting a remedial measure in a proportionate way," according to the agreement.
