Daily Management Review

Few American Firms View US-China Limited Trade Deal Worth The Hit Of Tariffs


Few American Firms View US-China Limited Trade Deal Worth The Hit Of Tariffs
Results of a new survey conducted by the United States- China Business Council show that there are only a handful of American companies that are doing business in China believe that the Phase 1 deal signed by President Donald Trump with China would be worth the cost that they have had to incur the import tariffs imposed by China during the trade war between the countries that have been ongoing for more than two years now.
The belief that the potential benefits that would be created for American companies because of the Phase 1 agreement between the US and China would be more than the hot that the companies have incurred because of the import tariffs of China was expressed only by 7 per cent of the respondents who participated in the survey, said the trade group. In contrast, about 36 per cent of the respondents participating in the survey believed that the hit to their business because of the Chinese tariffs would be more than the benefits flowing to them out of the Phase 1 trade agreement. But about 56 per cent of the respondents said that it was too early to estimate the benefits of the Phase 1 trade agreement and hence a comparison was not possible.
However, the survey also showed that a “positive” or somewhat positive overall view of the limited trade agreement between the two countries was expressed by about 88 per cent of the respondents of the survey, the USCBC said. And about half of those responding positively to the Phase 1 trade deal were of the opinion that the deal “makes the bilateral relationship more stable and decreases chances for further tariff escalation.”
Under the limited Phase 1 trade deal between the US and China, which came into force from February 15 this year, mandates that China will increase imports of farm and manufactured products and energy and services from the US by $200 billion over a period of two years. The agreement on trade also includes a promise by China of greater access to the financial market of China for American companies along with some improvements in intellectual property protections of American companies by the Chinese authorities.
However given the current pandemic situation and the increased tensions between the US and China has forced the shelving of the promised negotiations on a Phase 2 agreement between the two parties that were slated to cover the more difficult technology transfer issues, industrial subsidies and data restrictions.
Currently Chinese imports from the United States lags far behind the target increase for the first year – which is at $77 billion.
The Phase 1 trade deal is “fine right now”, said White House adviser Larry Kudlow on Tuesday, despite the shortfall in Chinese imports and rising tensions and a rapidly deteriorating US-China bilateral relationship over a number of issues ranging from the imposition of the controversial national security law in Hong Kong by China to the threat by Trump of banning the Chinese owned short video sharing app TikTok in the US.