A supposedly soon-to-be-signed pact between China and the US could help bring an end to the superpowers’ trade war.
US President Donald Trump, who was impeached on Thursday, said he was close to signing the ‘Phase One’ trade pact with China “very shortly”.
Speaking at a Turning Point USA event in Florida on Saturday, Mr Trump said the US administration had “achieved a breakthrough” on the deal.
The deal itself was announced earlier in December, with hopes it might bring an end to the feud between the nations that has so far lasted 17 months.
“We have agreed to a very large Phase One deal with China,” Mr Trump said on December 13.
“They have agreed to many structural changes and massive purchases of agricultural product, energy, and manufactured goods, plus much more.”
Under the deal, the US would agree to reduce some tariffs in exchange for a big jump in Chinese purchases of American farm products.
Treasury Secretary Steven Mnuchin said last week the pact would be signed in early January, saying the deal had already been translated and was just undergoing a technical “scrub”.
Good news for markets
The trade war has rattled investors and caused stockmarkets to fluctuate wildly between gains and losses as each nation has struck new blows against the other.
In August, Australia’s benchmark ASX 200 stock index lost $US30 billion and the Australian dollar dropped to its lowest point in a decade after China unveiled plans to place tariffs on $75 billion worth of goods imported from the US.
Those tariffs were threatened in retaliation for Mr Trump’s promise to increase its tariffs on $US250 billion of goods it purchased from China, lifting them from 25 per cent to 30 per cent.
That threat was never acted upon, however, and China instead agreed to purchase an additional $US40 billion to $US50 billion of farm products.
News of the latest pact prompted gains in markets around the world, according to AMP chief economist Shane Oliver.
“Japanese shares fell 0.9 per cent, but US shares rose 1.7 per cent, Eurozone shares gained 1.4 per cent and Chinese shares rose 1.2 per cent benefitting from a continuing reaction to the US/China trade deal – including reports after a meeting between Presidents Trump and Xi that it’s on track to be signed in early January – and OK economic data holding out the prospect of stronger growth in 2020,” he said.
“Australian shares rose 1.1 per cent helped by the positive global lead.”