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US, China reach substantial ‘phase one’ trade deal, says Donald Trump

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The US and China agreed on the outlines of a partial trade accord Friday that President Donald Trump said he and his counterpart Xi Jinping could sign as soon as next month.

As part of the deal, China would significantly step up purchases of US agricultural commodities, agree to certain intellectual-property measures and concessions related to financial services and currency, Trump said Friday at the White House. In exchange, the US will delay a tariff increase due next week as the deal is finalized, though new levies scheduled for December haven’t yet been called off.

The agreement marks the largest breakthrough in the 18-month trade war that has hurt the economies of both nations.

Importantly, Trump said the deal was the first phase of a broader agreement. The president indicated he could sign a deal with Xi at an upcoming November summit in Chile.

While the limited agreement may resolve some short-term issues, several of the thorniest disputes remain outstanding. US goals in the trade war center on accusations of intellectual-property theft, forced technology transfer and complaints about Chinese industrial subsidies.

Xi told Trump in a letter — which the White House distributed on Friday — that it’s important the countries work together to address each other’s concerns. “I hope the two sides will act in the principle and direction you and I have agreed to, and work to advance China-US relations based on coordination, cooperation, and stability,” the letter said.

Phase Two

The Trump administration also said issues related to Huawei Technologies Co. aren’t part of Friday’s deal and will be a separate process. The Chinese telecommunications equipment maker, which was placed on an export blacklist in May, will be discussed in the second phase of the negotiations, the president told reporters later on Friday.

Equities advanced globally Friday amid a growing conviction that the world’s two biggest economies would negotiate a trade truce, though US stocks pared gains after Trump’s announcement near the close of trading. Trump tweeted earlier Friday that if the countries did reach an agreement, he would be able to sign it without a lengthy congressional approval process.

Trump’s announcement drew a wary welcome from even Republicans on Capitol Hill.

“After they have sacrificed so much, Americans will settle for nothing less than a full, enforceable and fair deal with China,” Senate Finance Committee Chairman Chuck Grassley said in a statement after the announcement. “Farmers in Iowa know far too well that the trade war has caused real financial pain in the heartland. But we need to know more about this deal and follow-through from China will be key.”

On Thursday and earlier Friday, Liu and US Trade Representative Robert Lighthizer held the first senior-level discussions between Washington and Beijing since a previous agreement fell apart in May and they raised tariffs in the months after.

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