We have been monitoring for a news update on whether U.S. & CHINA reached a “PHASE ONE DEAL” since we last wrote about it on October 11, 2019. Two months later, the USTR published a press release confirming that the United States and China have reached an historic and enforceable agreement on a Phase One trade deal and President Trump tweeted the announcement noting that this “is an amazing deal for all”.
What does the “Phase One Deal” Include?
- The deal requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.
- The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years.
- Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.
- The United States has agreed to modify its Section 301 tariff actions in a significant way.
What is the Impact on Section 301 Tariffs?
- Lists 1, 2, 3 will continue to be subject to 25% tariffs
- Approximately $250 billion of Chinese imports
- List 4A has been reduced to 7.5% from 15%
- Approximately $120 billion of Chinese imports
- The effective date for the reduced tariff has NOT been announced.
- List 4B will not become effective on December 15.