China and the United States have agreed that an initial trade deal between the two countries would roll back a portion of the tariffs they are placing on each other’s products. This is a significant step toward defusing tensions between the world’s largest economies.
The agreement has not been completed as of now. A deal could fail to materialize as it has in previous rounds of negotiations. However, if a pact is reached, the Trump administration has committed to cutting some tariffs.
This is the first time the administration has agreed to remove some of the tariffs it has placed on $360 billion worth Chinese goods. While President Trump cancelled a planned tariff increase in October, he has routinely considered the prospect of additional taxes if Beijing does not accede to America’s trade demands.
A deal that includes even some tariffs reversals creates a political dilemma for Mr. Trump, who is a self-avowed “tariff man” and has used levies to punish China for trade practices that have helped hollow out American manufacturing and to press Beijing to change its economic practices. But stock markets do not share his affinity for tariffs. They have been steadily rising with the hope of a deal. Many businesses and farmers, struggling under the weight of the president’s trade war, are also eager for a deal.
Both President Trump and Xi Jinping, his Chinese counterpart, are facing increasing political and economic pressure to resolve their trade fight, which has inflicted damage on both sides. Mr. Trump is going for a re-election campaign as the American economy begins to slow and as key political constituencies, like farmers and manufacturers, continue to suffer from lost sales to China.