Trade Progress: China Deal, USMCA Advance

President Trump welcomes Chinese officials to D.C. this week to sign the recently negotiated phase-one trade deal with China, marking a formal truce in the U.S-China trade war. He plans to travel to Beijing soon to negotiate a broader pact.

This agreement calls on China to dramatically increase its imports of U.S. farm goods. In exchange, the U.S. canceled new tariffs on roughly $156 billion in Chinese imports that were set to take effect last month. The Trump administration also agreed to slash the tariff rate in half on about $120 billion of Chinese goods.

According to U.S. negotiators, China has agreed to buy an average of at least $40 billion annually in agricultural goods starting in 2020—nearly twice as much its peak purchases before the trade war began in 2018. To reach those numbers, China might need to reduce purchases from agricultural exporters like Brazil and Argentina.

The Senate Finance Committee last week overwhelmingly voted to advance legislation associated with the United States Mexico Canada Agreement. The USMCA now goes to the Senate floor, where final approval is expected as early as this week.

Both developments come amid news from the U.S. Commerce Department that the nation’s trade deficit shrank in November by just over 8 percent. If the trade imbalance stays on that path in December, it would be the first time that the yearly trade deficit went down on a year-to-year basis in six years.

Sources: Wall Street Journal, Atlanta Journal-Constitution