Confirming what we said earlier, namely that the December 15 tariffs will not be imposed, but existing tariffs will not be rolled back (although the September 15% tariffs will be cut in half) even though China says the US has “promised” to do so in phases, moments ago president Trump tweeted his own take of what the trade deal says, which is the following:
“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.
The Penalty Tariffs set for December 15th 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. This is an amazing deal for all. Thank you!”
…..The Penalty Tariffs set for December 15th 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. This is an amazing deal for all. Thank you!
— Donald J. Trump (@realDonaldTrump) December 13, 2019
For those who have lost track, of all the various moving parts, here is a snapshot of all the tariffs, with the notable item being the September $120BN tariffs whose rate will be cut in half, from 15% to 7.5%.
Meanwhile, for those who missed the earlier recap of the Chinese presser, this is what was said:
- CHINA: U.S. TO REMOVE TARIFFS ON CHINESE GOODS IN PHASES
- CHINA: FIRST PHASE TRADE TALKS HAVE ACHIEVED MAJOR ADVANCEMENT
- CHINA: THE DEAL WILL HELP BOOST GLOBAL MARKET CONFIDENCE
- CHINA: WILL COMPLETE ASAP TRANSLATION, LEGAL REVIEW OF DEAL
- CHINA: TO INCREASE IMPORTS FROM U.S. AND OTHERS
- CHINA: SIDES AGREE TO COMPLETE LAST STAGES AS SOON AS POSSIBLE
- CHINA: WILL WORK TO SET A DATE FOR SIGNING DEAL
- CHINA: HAS DECIDED TO CANCEL TARIFFS SCHEDULED TO TAKE EFFECT ON SUNDAY
- CHINA: U.S. HAS PROMISED TO CANCEL ADDITIONAL TARIFFS ON CHINESE PRODUCTS
Some details on agri products:
- CHINA PLANS TO IMPORT U.S. WHEAT, RICE, CORN WITHIN QUOTAS
Yet the confusion grows because contrary to the US spin on the deal, China refuses any mention of boosting agri imports:
- CHINA DIDN’T ANSWER QUESTION ON SIZE OF AG BUYS FROM U.S.
- SOY, HOGS PARE GAINS; CHINA SAYS NO DETAILS YET ON AG IMPORTS
This confirms that China opposes any contractual agreement to boost US imports as that would put Chinese farmers at a disadvantage, and forcing Beijing to provide stimulus.
- CHINA: ARE TALKING ABOUT TIMING, PLACE, DETAILS OF SIGNING DEAL
It is unclear if both sides will sign their own version of what the deal says.
This is how we summarized the Chinese presser:
the December 15 tariffs will not be imposed, but existing tariffs will not be rolled back even though China says the US has “promised” to do so in phases. In other words, once again there is no actual Phase 1 deal, there is just an agreement to avoid a new round of tariffs with both sides making vague promises.
So to summarize again” there is no actual, enforceable deal. There is only a “deal” for public consumption, one that indicates both sides have promised to make unenforceable concessions, with no new tariffs imposed and Trump cutting the Sept 2019 tariffs in half from 15% to 7.5%.
Meanwhile, Trump has already hinted how he will levitate the market for the next year – by danging hope that Phase 2 is going great and will be completed any minute, even though China denied, saying that:
- NEGOTIATIONS FOR PHASE TWO DEAL TO DEPEND ON IMPLEMENTATION OF PHASE ONE DEAL – CHINA VICE FINANCE MINISTER
So yes, anything to get stocks higher.