The United States and China on December 13 announced an agreement in principle on a ‘Phase One’ trade deal. According to a statement from the United States Trade Representative (USTR), the deal “requires structural reforms and other changes to China’s economic and trade regime regarding intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.” The agreement includes a commitment by China to make additional purchases of US goods and services in the coming years. In exchange for China’s commitments, the United States has agreed to modify its Section 301 tariff actions.
While the Phase One agreement represents substantial progress, the Lists 1-3 and 4A tariffs remain in place, albeit at lower rates with respect to List 4A. US companies whose supply chains flow through China should continue to analyze their imports, supply chains, and sourcing patterns to determine the impact of the various tariffs. Further, mitigation strategies should be explored via the use of available analytical tools.