China, Trump Confirm Phase 1 Trade Deal, Avoiding $160B In New Tariffs

Chinese officials said Friday that the a Phase One agreement has been reached with the U.S. on trade that includes a phased rollback of tariffs. 

The Dow Jones Industrial Average jumped more than 100 points as Chinese officials began a press conference late Friday Chinese time to announce the agreement.

Chinese Commerce Vice Minister Wang Shouwen announced the deal. Chinese officials said it requires technical legal review before it is signed, but that the two sides had agreed on a deal that will lead to mutual reduction in tariffs on a "step-by-step" basis and improve Sino-American relations overall. 

We have agreed to a very large Phase One Deal with China. They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more. The 25% Tariffs will remain as is, with 7 1/2% put on much of the remainder....

— Donald J. Trump (@realDonaldTrump) December 13, 2019

President Donald Trump had on Thursday reportedly approved the outlines of the agreement, which was reported to include Chinese purchases of U.S. agricultural products in 2020 and the U.S. delaying $160 billion in tariffs that were scheduled to take effect Sunday.

The tariffs that had been set to go into effect Sunday "will not be charged" with the new deal, Trump said in a Friday tweet.

"We will begin negotiations on the Phase Two Deal immediately," he said. 

Neither side said immediately what the "massive purchases" of agricultural product purchases would amount to, with Chinese officials indicating the agreement on the final amount hasn't been finalized.

“President Trump has focused on concluding a Phase One agreement that achieves meaningful, fully enforceable structural changes and begins rebalancing the U.S.-China trade relationship," U.S. Trade Representative Robert Lighthizer said in a statement. 

"This unprecedented agreement accomplishes those very significant goals and would not have been possible without the president’s strong leadership." 

The SPDR S&P 500 ETF Trust SPY was trading down 0.05% at $316.98 at the time of publication, while the iShares China Large-Cap ETF FXI was trading 0.22% higher at $42.89. 

Related Links: 

Market Awaits Confirmation Of US-China Trade Deal

3 Reasons The Stock Market Won't Make New Highs On The Phase I Trade Deal

White House photo by Joyce Boghosian.