U.S. negotiators have reached the terms of a phase-one trade deal with China that now awaits President Donald Trump’s approval, according to people briefed on the plans. Trade advisers were set to meet with the president at 2:30 p.m. to discuss the agreement. An announcement could come by day’s end, the people said. A White House spokesperson declined to comment.
The terms have been agreed but the legal text has not yet been finalized, according to the people. The administration has reached out to allies on Capitol Hill and in the business community to issue statements of support once the announcement is made, they said.
U.S. stocks rose and Treasury yields spiked on the news. Earlier Thursday, Trump tweeted that the U.S. and China are “VERY close” to signing a “BIG” trade deal, also sending equities higher.
“They want it, and so do we!” he tweeted five minutes after equity markets opened in New York, sending stocks to new records.
The phase-one pact has been expected to reduce existing tariffs and delay ones due to take effect on Sunday.
Trump has rejected deals with China before. Negotiators have been working on the terms of the phase-one deal for months after the president announced in October that the two nations had reached an agreement that could be put on paper within weeks.
The U.S. has added a 25% duty on about $250 billion of Chinese products and a 15% levy on another $110 billion of its imports over the course of a roughly 20-month trade war. Discussions now are focused on reducing those rates by as much as half, as part of the interim agreement Trump announced almost nine weeks ago.
Read more: China Sees U.S. Delaying Dec. 15 Tariff Hike as Talks Drag
A phase-one pact is expected to be built largely around a significant increase in Chinese agricultural purchases in exchange for the U.S. delaying a new round of tariffs scheduled to take effect Dec. 15 and a reduction in existing levies.
Officials have also said it will include Chinese commitments to do more to stop intellectual-property theft and an agreement by both sides not to manipulate their currencies. Put off for later discussions are knotty issues such as longstanding U.S. complaints over the vast web of subsidies ranging from cheap electricity to low-cost loans that China has used to build its industrial might.
While the White House gathering may highlight continuing divisions over whether to hit Beijing with a new wave of tariffs, Trump’s tweet suggests he may be willing to forego escalation for now.
Officials from the world’s two biggest economies have been locked in negotiations on the phase-one deal since Trump announced it.
The new duties, which are due to go ahead at 12:01 a.m. Washington time on Sunday unless the administration signals otherwise, would hit some $160 billion in consumer goods from China including smartphones and toys.
Before today, Trump’s advisers have sent conflicting signals and stressed that he hadn’t made up his mind on the next steps. Advocates of delaying the tariff increase have argued that continued negotiations with Beijing will enable him to maintain a tough line with China without inflicting the economic damage that more import taxes might bring.
The decision facing Trump highlights one dilemma he confronts going into the 2020 election: Whether to bet on an escalation of hostilities with China and the tariffs he is so fond of or to follow the advice of more market-oriented advisers and business leaders who argue a pause in the escalation would help a slowing U.S. economy bounce back in an election year.
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