WASHINGTON/BEIJING -- China and the U.S. have reached a partial trade deal, officials from both countries said Friday, marking a step toward resolving a tit-for-tat tariff battle that has dragged on for well over a year.
"The two sides will complete as soon as possible procedures for the official signing of the agreement," Chinese Vice Commerce Minister Wang Shouwen told reporters in Beijing in a late-night news conference. U.S. Trade Representative Robert Lighthizer told reporters that the deal will be signed at the ministerial level in the first week of January.
Wang said that the U.S. side had promised to cancel additional tariffs on Chinese products that were planned for Sunday and that Beijing will cancel its own planned tariffs.
A separate official said that China will import more American wheat and corn after the deal is signed.
In addition to the cancellation of the 15% tariffs on $160 billion worth of goods that were planned to kick in on Sunday, the 15% duties on $120 billion in Chinese imports imposed Sept. 1 will be halved to 7.5%, according to a statement from the Office of the U.S. Trade Representative.
This marks the first rollback since the two sides began imposing punitive tariffs in July 2018. Meanwhile, existing 25% levies on $250 billion in goods, that were part of the first three rounds of tariffs, will remain in place.
"We have agreed to a very large Phase One Deal with China," U.S. President Donald Trump said in a tweet on Friday. "They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more."
He wrote that the December tariffs will not be charged "because of the fact that we made the deal."
"We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election," Trump added.
He wrapped up by calling it "an amazing deal for all."
Back in Beijing, the state-run Xinhua News Agency reported that "China and the United States have agreed on the text of a phase one economic and trade agreement based on the principle of equality and mutual respect."
While U.S. stocks rose when the agreement was initially announced, they shed their gains as more details emerged. The Dow Jones Industrial Average closed up 3.33 points, or 0.01%, at 28,135.38.
Lighthizer told reporters that China has agreed to buy $200 billion in additional U.S. goods and services over the next two years, in such sectors as manufacturing, energy, agriculture and services.
For agricultural purchases, the Chinese will increase the scale by $32 billion over the next two years, or roughly $16 billion a year more than the 2017 baseline of $24 billion, Lighthizer said. As a result, total purchases of farm products will reach an annual $40 billion and China will make efforts to raise that to $50 billion, he said.
Trump told reporters at the White House that he thinks the purchases will hit $50 billion. The president also said that the U.S. will leverage the remaining tariffs as it seeks to negotiate a phase two trade deal with Beijing.
A USTR fact sheet said the two sides committed to end unfair currency practices by refraining from competitive devaluations and targeting of exchange rates, while significantly increasing transparency.
On technology transfers, the fact sheet said: "For the first time in any trade agreement, China has agreed to end its long-standing practice of forcing or pressuring foreign companies to transfer their technology to Chinese companies as a condition for obtaining market access, administrative approvals, or receiving advantages from the government."
The agreement gives Trump a diplomatic win ahead of the fast-approaching 2020 presidential election and relieves trade tensions that have ramped up in fits and starts since Washington imposed the first round of punitive tariffs in July 2018.
Yet its impact on structural issues that motivated the trade war, such as Chinese state subsidies and intellectual property concerns, is less clear.
The deal covers intellectual property, technology transfer and currency issues, according to both sides. And it "establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement," the U.S. trade representative's office said in its statement.
But no details have been provided, and Wang said China will step up intellectual property protection "at its own pace."
And the agreement must still undergo legal review, translation and proofreading before it is officially signed. That process sunk a previous draft deal in May that was ultimately gutted by China's Politburo.
Should the deal survive, Trump can tout the import pledge as spoils of his trade war to shore up electoral support among Midwestern farmers.
Chinese retaliatory tariffs led to a 53% year-on-year plunge in American exports of agricultural products to one of the industry's largest markets in 2018, according to U.S. data. Trump had pressed Beijing to commit to $40 billion to $50 billion a year in additional purchases -- nearly double China's largest-ever annual total of $26 billion in 2012.
And the tariff rollback may alleviate trade-war-driven weakness in the manufacturing sector that could pose a risk to Trump's reelection.
The ISM Manufacturing Purchasing Managers' Index came in below the boom-or-bust mark of 50 for a fourth straight month in November. In Wisconsin, a traditionally Democratic state that Republican candidate Trump flipped in the 2016 election, manufacturing jobs have declined over the past year on a net basis.
The duties slated for Sunday would have expanded the trade war to high-tech consumer products, including smartphones, with globe-spanning supply chains. American companies including Apple have lobbied against the move, worried about the potential impact on their supplier networks.