China Considering Restoring To Phase 1 Of Trade Deal

China is reportedly considering restoring the “Phase 1” trade deal, originally signed in 2020 during Donald Trump’s first term, as part of its response to the tariffs imposed by the U.S. The Wall Street Journal, citing sources, outlines that China’s initial proposal includes efforts to reinstate the agreement and introduce measures such as a pledge to avoid devaluing the yuan, increased U.S. investments, and a reduction in fentanyl precursor exports.

The trade tensions escalated on Saturday when Trump imposed tariffs of 25% on Mexican and most Canadian imports and 10% on Chinese goods, with the rationale being linked to concerns over fentanyl, a potent opioid, and illegal immigration. While China strongly opposed these tariffs, particularly in regard to fentanyl, it indicated a willingness to negotiate with the U.S. to prevent further conflict. In contrast, Canada retaliated by imposing 25% tariffs on $105 billion worth of U.S. goods.

China Considering Restoring To Phase 1 Of Trade Deal

The Phase 1 deal, which had brought an end to a lengthy tariff war in 2020, required China to purchase $200 billion worth of U.S. goods over two years. However, due to the COVID-19 pandemic, China failed to meet these targets, leading the U.S. to reassess the deal’s progress. Reuters reported that Trump had instructed the U.S. Trade Representative (USTR) to review China’s adherence to the deal in January.

Additionally, Beijing plans to treat the issue of TikTok primarily as a commercial matter. This would allow ByteDance, the Chinese company behind the app, to negotiate a deal with potential U.S. buyers, including companies like Microsoft, which Trump has previously mentioned as a possible bidder.

Neither the U.S. Department of Commerce nor China’s Ministry of Commerce responded to inquiries about the report due to the Lunar New Year holiday.

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