U.S. and China Sign “Phase One” Trade Agreement

On January 15, 2020, the U.S. and China signed a “phase one” trade agreement previously announced by the United States Trade Representative (USTR) in December 2019. The complete text of the trade agreement can be read here.
When the “phase one” trade agreement was first announced, the U.S. had suspended the additional 15-percent tariff on List 4B goods imported from China that was scheduled to take effect on December 15, 2019. Read here. The formal text of the “phase one” trade agreement does not directly address any further tariff reductions. However, the USTR is expected to publish a separate Federal Register notice on reduction of tariffs on List 4A goods from 15 percent to 7.5 percent later this week, and the tariff reduction is scheduled to take effect on February 14, 2020. Further, the U.S. will maintain the 25-percent tariffs currently in place on List 1, 2, and 3 goods imported from China totaling approximately $370 billion.
According to the “phase one” trade agreement, China will increase its imports of certain U.S. goods worth no less than $200 billion by the end of 2021, along with commitments in other areas including intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.
Beyond this limited truce, no further developments in the ongoing trade negotiations between China and the U.S. are expected this coming year due to November’s impending U.S. presidential election.
For more information and to discuss ways to mitigate the continuing cash impact of the Section 301 China tariffs, please contact a BDO Customs and International Trade Services professional.