After nearly two years of on-and-off negotiations and tariff escalations, the U.S. has reportedly offered to halve tariff rates on about US$350 billion worth of Chinese goods, some of which had climbed as high as 25%. However, some have described it as a “purchase agreement” and not a “deal agreement” since the deal is not expected to address many of the more difficult issues that triggered the trade tensions, such as China’s subsidies for certain industries. The Phase One deal commits China to buying at least US$40 billion of U.S. agricultural goods annually, tightens protection for U.S. intellectual property and bans the forced transfer of technology from U.S. companies. The agreement is expected to be signed in January and to be effective in February.

“We welcome the U.S. President’s announcement to eliminate plans to increase tariffs and reduce previously implemented tariffs a part of the phase one trade deal with China”, said Matt Priest, President and CEO, Footwear Distributors and Retailers of America (FDRA). “Tariffs are hidden taxes paid by U.S. individuals and families, and hitting these hardworking individuals and families with a massive tax increase during the holiday season would stifle economic growth and threaten jobs in our industry. Footwear already faces a US$3 billion tariff burden every year. As negotiations continue, we urge the Administration to further eliminate high footwear tariffs that are hurting American footwear companies and consumers.”

Sources: BBC/Financial Times