US says it has no deadlines for 'phase two' China trade deal

Treasury Secretary Steve Mnuchin says tariffs will stay on Chinese goods and service as negotiations continue

US says no deadlines for phase two trade deal with China                                 

The US has no deadline for implementing a phase two trade agreement with China, even with the presidential election due later this year, according to Treasury Secretary Steve Mnuchin.

Speaking on a panel on financial markets at the World Economic Forum in Davos, Mnuchin said Washington would maintain tariffs on Chinese goods and services as it negotiates the next phase of the trade agreement.

"There's no question that the President's tariffs have been a big incentive in all these trade agreements," Mnuchin said. "We could easily have 2a, 2b and 2c. It doesn't need to be a big bang … [the tariffs] are a big incentive for the Chinese to continue to negotiate and conclude various parts of the agreement.”

Mnuchin added that there were “no deadlines for phase two”, despite the looming election.

Global equities have extended last year’s record gains to hit successive all-time highs so far in January, but this optimism might not last if investors do not see sustained progress in trade talks, according to Axel Weber, chairman of Swiss investment bank UBS.

“Phase one was a welcome break for the markets, but it’s not a breakthrough, because phase two is going to be more important … what we look at is what has been the impact, what is in the pipeline,” Weber told the Davos panel. “The whole trade universe is being renegotiated.”

Under the phase one agreement signed last week, China has promised to boost US imports by $200bn (£152bn, €180bn) above 2017 levels and to strengthen intellectual property rules. In exchange, the US has said it will halve some new tariffs imposed on Chinese goods.

Since the start of the dispute in May 2018, the two countries have slapped billions of dollars in duties on each other’s imports.

International Monetary Fund managing director Kristalina Georgieva. said: "A trade truce is not the same as trade peace and trade peace is what we should be aiming for.”

She added that the world was “in a better place” now compared to October, thanks largely to the US and China reaching initial agreement on how to resolve their near-two year old dispute.

Next on the US list for 2020 is negotiating a trade deal with the UK following the country’s exit from the European Union, Mnuchin said.

Mnuchin said it was a “big priority of ours”, as did British Chancellor of the Exchequer Sajid Javid, who also took part in the Davos panel. He said the UK government would work on trade agreements with both the US and the EU this year.

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