China has hinted at reaching a ‘phase one’ deal with the US by simultaneously cancelling some tariffs on each other’s goods. With this news, the whole world is optimistic that this could possibly mean an end to the long-standing trade war between the US and China.
The US – China trade war has become one of the most significant political developments in recent times. Tempers and tariffs have increased on both sides which has ultimately affected the global market and slowed down economic growth. Going by the facts, the tariffs imposed by the US on China in the middle of last year cost the Asian giant 35 billion dollars in the first half of 2019, according to a report by United Nations trade agency, UNCTAD.
Trade tariff spat
On the current scenario, Gary Hufbauer of the Washington-based Peterson Institute for International Economics mentioned in a BBC report that the full-blown trade war, together with China's retaliation in kind, could reduce potential US GDP growth in the short run by almost 1 % and the impact on China would be larger, as much as 5 %. Adding to this, Alessandro Nicita, an economist at the UN trade agency, UNCTAD in a report opines that the trade tariff spat between China and the United States has been a ‘lose-lose’ situation for both countries and the wider world and it is likely to deteriorate unless a deal is reached.
Update on US – China trade relations
In November this year, consumers and companies in both the countries as well as the global market cheered as China’s Commerce Ministry announced that the US and China will cancel the tariffs imposed during the trade war in phases if their trade talks advance. The prolonged crisis has deeply affected domestic players on both sides as they had to pay higher tariffs for imported goods and now they are hopeful that there will finally be a breakthrough.
On the new development, without mentioning the timeline and the number of tariffs to be cancelled, Gao Feng, the Chinese commerce ministry spokesman said, “Both must simultaneously cancel some tariffs on each other’s goods to reach a ‘phase one’ trade deal.” He further added that the two countries have held constructive talks and that the trade war started with tariffs and should end with the cancellation of tariffs. The Trump administration is yet to confirm this news however; it is known that the Donald Trump is exploring several locations to sign the first phase of a trade agreement with China.
We hope that the venue of signing the new agreement ushers in positive developments for both the countries and are pretty sure that the world has its fingers crossed!