The United States said Friday it has reached a "phase one" trade deal with China, agreeing to suspend a planned tariff hike on Chinese goods in exchange for Beijing offering to make large agricultural purchases and seeing progress on intellectual property protection.
The move represents a letup in a protracted tit-for-tat tariff war that has cast a shadow over the world economy, but the United States said talks for a broader deal would continue as it pushes to reduce its trade deficit with China and rectify what it sees as unfair trade practices such as forced technology transfers.
"We've come to a very substantial phase one deal," U.S. President Donald Trump said following two days of ministerial-level trade talks in Washington, the first since the end of July. He said the deal covers agricultural purchases, intellectual property, financial services and currency issues.
Chinese Vice Premier Liu He, who led the country's negotiating team, told Trump at the White House that he is happy that "substantial progress" was seen in many fields.
The United States said it will suspend an increase of tariff rates to 30 percent from 25 percent on about $250 billion of Chinese imports, a move that was planned for Tuesday.
China, for its part, will purchase $40-50 billion worth of U.S. agricultural products compared from the current $8 billion, Trump said, calling it "the largest deal ever made for farmers."
On U.S. concerns over China's alleged currency manipulation to boost exports, Treasury Secretary Steven Mnuchin said he was pleased that an agreement was reached "around transparency into the foreign exchange markets." He also welcomed the discussions on opening up Chinese markets to U.S. financial services firms.
Trump said the phase-one deal will be put in writing over the next four weeks and that he is eager to sign it with Chinese President Xi Jinping if they meet on the sidelines of a regional economic meeting to be held in Chile in mid-November.
While details of the deal remain unclear, the two sides have apparently prioritized reaching agreements on areas that are less controversial, such as purchases of farm products.
The initial deal also did not include issues such as whether to continue to label China "a currency manipulator" and keep Chinese telecom giant Huawei Technologies Co. on the U.S. economic blacklist.
The president told reporters that the Huawei issue was not discussed relative to the deal and added, "Basically, the status will remain the same."
Once the phase-one deal is signed, the two countries will enter into talks on "phase two" to include issues such as technology transfers, Trump said. There may even be "phase three" if they cannot address all the outstanding issues, he added.
The agreement came as the tariff war continues to cast uncertainty over prospects for the world's two largest economies.
Three rounds of tariffs by the Trump administration since July 2018 have resulted in taxes on $250 billion worth of Chinese goods -- roughly half the amount China sold to the United States last year.
While an additional five-percentage-point tax hike on the $250 billion worth of goods will not be implemented from next week, concerns over another escalation of the tariff war remain.
U.S. Trade Representative Robert Lighthizer said the president has not made a final decision on whether to move ahead with a plan to fully impose 15 percent tariffs on a further $300 billion worth of Chinese goods -- a move that would see nearly all imports from China taxed.
Some of these additional tariffs took effect Sept. 1, with the remainder set to be enforced beginning Dec. 15.
Although Trump is eager to claim a major trade victory to boost his 2020 re-election bid, concerns have been growing inside the United States over the potential impact of the spiraling tariff war.
The U.S. Chamber of Commerce, the country's largest business lobby, has been expressing its opposition against using tariffs to address China's unfair trade practices.
"The additional tariffs are not the answer. Tariffs on Chinese imports amount to nothing more than attacks on American businesses, farmers and consumers," Myron Brilliant, executive vice president of the organization, said Thursday.