Washington has agreed to suspend some tariffs on Chinese goods and cut others in return for Beijing's pledge to hike U.S. farm product purchase in 2020, sources said on Thursday, taking a step to de-escalating the bitter trade war.
Neither Washington nor Beijing have released any official statements, however, raising questions about whether the terms had been agreed by both sides.
A source briefed on the status of bilateral negotiations said the United States would suspend tariffs on $160 billion in Chinese goods expected to go into effect on Sunday and roll back existing tariffs.
In return, Beijing would agree to buy $50 billion in U.S. agricultural goods in 2020, double what it bought in 2017, before the trade conflict started, two U.S.-based sources briefed on the talks said.
The news helped cheer financial markets with the Chinese yuan surging to its highest in more than four months while shares rose in early Asian trade on Friday.
Both countries need to make formal announcements to cancel or postpone the scheduled tit-for-tat tariffs on each other's goods that are scheduled to take effect Sunday, however. Chinese tariffs on U.S. goods would take effect at 0401 GMT, while U.S. tariffs on Chinese goods are scheduled to take effect at 0501 GMT.
China has so far refrained from imposing unilateral tariffs on U.S. imports but has matched any new round of tariffs implemented by Washington with retaliatory measures.
Two people familiar with the negotiations had said earlier on Thursday that U.S. negotiators were offering to cut existing tariffs on Chinese goods by as much as 50% as well as suspend the new tariffs scheduled to go into effect on Sunday in an attempt to secure a "Phase 1" deal first promised in October.
One Beijing-based U.S. business community official told Reuters he viewed what was being described more as a "final offer" that has been approved by Trump but not yet affirmed by Beijing.
Senior Chinese diplomat Wang Yi on Friday sharply criticized Washington for damaging the "hard-won foundation of mutual trust" between the two countries, citing U.S. positions on Hong Kong protests and China's camps for ethnic Uighurs. "We are willing to resolve contradictions and differences between China and the United States through dialogue and consultation on the basis of equality and mutual respect, but we will never accept the so-called unilateral sanctions and any acts of bullying," he said. Though Wang did not explicitly comment on trade negotiations, his remarks underscore the increasingly confrontational relationship between the world's top two economies.
The U.S.-China trade war has slowed global growth and dampened profits and investment for companies around the world. The United States has announced $28 billion in subsidies for American farmers affected by the dispute.
"If signed, this is an encouraging first phase that puts a floor under further deterioration of the bilateral relationship," said U.S.-China Business Council President Craig Allen. "But this is just the beginning. The issues facing the US and China are complex and multi-faceted. They are unlikely to all be resolved quickly."
China bought $24 billion in U.S. farm products in 2017, according to U.S. Department of Agriculture figures.
AN AG BUY TURNAROUND
Trump first flagged the "Phase 1" in-principle trade agreement on "intellectual property, financial services" and a "purchase of from $40 (billion) to $50 billion worth of agricultural products" in October, although few details have emerged.
Beijing has also since balked at committing to buy a specific amount of agricultural goods during a certain time frame, however. Chinese officials said they would like the discretion to buy based on market conditions.
Analysts have also since questioned whether the $50 billion figure is realistic.
Soybeans made up half of China's agricultural purchases in 2017. Demand has since cratered because the pig herds that eat it have been decimated by African swine fever.
Chinese officials have demanded the United States roll back tariffs that Trump put in place as a condition of any "Phase 1" deal. The Trump administration has put tariffs on hundreds of billions of dollars in Chinese imports, starting in July 2018.
Although there appeared to be an agreement in principle, it was unclear whether it was a written deal or even if Beijing had agreed to it, said one Washington-based source familiar with the talks.
"Until the full text is released, it's not particularly actionable. It's very unclear to me: Is this an agreement in principle or is it an agreement?" the source said.
If Trump does not suspend the tariffs scheduled to go into effect on Sunday, Beijing officials will apply more tariffs on U.S. goods and may suspend talks until after the U.S. presidential election in November 2020, trade experts believe.
The new tariffs would apply to almost $160 billion of Chinese imports such as video game consoles, computer monitors.
In August, China said it would impose 5% and 10% in additional tariffs on $75 billion of U.S. goods in two batches. Tariffs on the first batch kicked in on Sept. 1, hitting U.S. goods including soybeans, pork, beef, chemicals and crude oil.
The tariffs on the second batch of products are also due on Sunday, affecting goods ranging from corn and wheat to small aircraft and rare earth magnets.
China also said it will reapply on Dec. 15 an additional 25% tariff on U.S.-made vehicles and 5% tariffs on auto parts that had been suspended at the beginning of 2019.