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Containers are seen at the port in San Pedro, Calif., on, March 22, 2018.

Bob Riha Jr/Reuters

The United States and China cooled their trade war on Friday, announcing a “Phase one” agreement that reduces some U.S. tariffs in exchange for increased Chinese purchases of American farm products and other goods.

Beijing has agreed to buy $32 billion in additional agricultural goods over the next two years, U.S. officials said, from a baseline of $24 billion purchased in 2017, before the trade war started. China would also ramp-up purchases of U.S. manufactured goods, energy, and services.

The United States would suspend tariffs on Chinese goods due to go into effect on Sunday, and reduce others, officials said. A deal is expected to be signed the first week of January in Washington by principal negotiators.

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U.S. President Donald Trump tweeted Friday morning “We have agreed to a very large Phase One Deal with China.” Officials in China have “agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more,” he said.

During a later news conference in the White House, Trump said he thought China would hit $50 billion in agricultural purchases.

In a press conference Friday night in Beijing, Chinese officials said the two countries have achieved major progress in their phase one trade negotiations, and agreed on the text of a deal, but offered no specific details on the amount of U.S. goods Beijing had agreed to buy.

The agreement was announced as the U.S. House Judiciary Committee voted in Washington to charge Trump with abuse of power and obstruction during an impeachment inquiry.

Some U.S. business groups hailed the deal as an end to uncertainty that’s slowed global growth; critics questioned whether the trade war had been worth the job losses and drop in sales.

U.S. markets have gyrated on rumours and leaks about the trade deal in recent months, but were muted on Friday on news it had been agreed.

CHINA AG BUYS

China has agreed to aim to purchase $50 billion in farm products a year, Robert Lighthizer, the United States Trade Representative, told reporters at the White House on Friday.

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To get there, Beijing has committed to buying $16 billion more a year in farm products over the next two years, he said.

The United States has been pushing for the $50 billion figure after Trump said during an October 11 press conference that the two countries had agreed to a “Phase one” trade deal that included a “purchase of from $40 (billion) to $50 billion worth of agricultural products.”

Beijing has since balked at committing to buy a specific amount of agricultural goods during a certain time frame, however. Chinese officials said they would like the discretion to buy based on market conditions.

China will import more U.S. wheat, corn, and rice after the deal, China’s vice agricultural minister said Friday, but did not elaborate.

China has not been a major buyer of U.S. corn, wheat or rice in the past - though in recent years it has been the No. 3 or 4 buyer of one particular variety of wheat, U.S. spring wheat used for blending. China was a top 5 buyer of U.S. corn from 2011 to 2014 but has not been a major buyer since.

Soybeans made up half of China’s agricultural purchases in 2017. Demand has since cratered because the pig herds that eat it have been reduced by African swine fever.

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Asked specifically about Trump’s $50 billion figure, officials in Beijing said Friday that details on value will be disclosed later.

Lighthizer didn’t offer any details about Chinese commitments to import U.S. energy or other products.

TARIFF ROLLBACKS

The U.S. has agreed to suspend tariffs on $160 billion in Chinese goods due to go into effect on Dec. 15, Trump said on twitter, and cut some existing tariffs to 7.5%.

The Dec. 15 tariffs, which would have hit nearly $160 billion worth of Chinese-made consumer goods, including cell phones, laptop computers, toys and clothing, were scheduled to go into effect at 12:01 a.m. on Sunday. The U.S. Trade Representative’s office would need to file a Federal Register notice to rescind them, U.S. trade lawyers say.

A statement issued by USTR Friday did not mention the Dec. 15 tariffs, but said that the United States would leave in place 25% tariffs on $250 billion worth of Chinese goods. The Trump administration will cut the tariff rate in half, to 7.5%, on another $120 billion list of Chinese imports that was levied on Sept. 1, USTR said.

The products getting the lower tariff rate include flat-panel television sets, smart speakers, Bluetooth headphones and many types of footwear.

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China has also agreed to suspend retaliatory tariffs, targeting goods ranging from corn and wheat to U.S. made vehicles and auto parts, that were due to take effect Dec. 15.

INTELLECTUAL PROPERTY PROTECTIONS

The Trump White House initially laid out ambitious plans to restructure the United States’ relationship with China, including addressing what a 2018 United States Trade Representative investigation concluded were Beijing’s “unfair, unreasonable, and market-distorting practices.”

There is broad bipartisan support for Trump’s drive to hold China accountable for years of economic espionage, cyber attacks, forced technology transfer and dumping of low-priced goods made with hefty government subsidies.

The agreement Friday covers intellectual property, technology transfer, agriculture, financial services, currency, and foreign exchange, the United States Trade Representative said in a statement.

The deal will provide more protection for foreign companies in China, and Chinese companies in the United States, Chinese officials said.

Neither offered details.

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The Business Roundtable, a group of chief executives of the largest U.S. companies, said “This de-escalation in trade tensions is a positive step toward resolving important trade and investment issues between our two nations.”

Chris Murphy, the Connecticut senator, called it a “total capitulation,” saying China had made “zero hard commitments to structural reform.”

Lighthizer told reporters Friday that both sides could start negotiating on more difficult issues before the 2020 election in November.

“This is very hard stuff,” he said. “We have systems that are different. We have to figure out a way to integrate those systems and get it to a place where it benefits the United States more than it does.”

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