Published: Wed, January 15, 2020
Markets | By Otis Pena

Anxious Markets Await Trade Deal Signing, Futures Are Flat, US Data Surprises

Anxious Markets Await Trade Deal Signing, Futures Are Flat, US Data Surprises

Gold edged up on Wednesday, after a top USA official said tariffs on China would stay until a Phase 2 deal is completed, ahead of the signing of an interim trade deal between the two countries, while palladium scaled a record peak. That's a windfall for Trump supporters in rural America but an ambitious goal considering that China has never bought more than $26 billion in US agricultural products in a year.

The administration says China has pledged to boost its purchases of US goods and services over the next two years by $200 billion over 2017 levels. Reuters quoted sources as saying China would boost agricultural purchases by $32 billion over two years. The arrangement means that China is supposed to buy $40 billion in US farm exports.

And just as he is about to face an impeachment trial in the US Senate, Trump will be able to crow about a victory with his "phase one" agreement that includes pledges from China to beef up purchases of American crops and products, at least in the short term.

The US has dropped its designation of China as a currency manipulator, scrapped plans to impose tariffs on $160bn of Chinese imports and halved existing tariffs on a further $110bn, while Beijing has agreed to buy $40bn a year of American farm products - a perplexing target for a country that has never imported more than $26bn of such products from the US in any year.

Beijing announced on December 13, 2019, that China and the United States agreed on the text for a phase one economic and trade agreement "based on the principle of equality and mutual respect".

"Given the numerous deals that have been reached and then breached in the past two years, we are also skeptical", the National Farmers Union, which advocates on behalf of nearly 200,000 American farm families, said in a statement.

"The going to use whatever muscle it can to get what it wants", she said.

The oceans reached the highest temperature recorded in 2019
The study stated oceans have warmed steadily between 1955 and 1986 and warming has increased more rapidly in the last few decades.

Even so, 'The truce is good news for the US and the world economy'.

When Mr. Trump imposed tariffs on China, most economists said it would harm the USA economy by raising prices and inflation, essentially taxing US consumers and businesses.

"Not only must China follow through with its commitments in this phase one deal, but also work toward a comprehensive agreement that ends forced technology transfers, intellectual property theft and unfair restrictions on USA goods, including agriculture". The Trump administration paid out $28 billion in aid to farmers in the last two years. The meat, the core of (U.S. complaints about China's aggressive tech policies) has not yet been addressed.

He also said he would visit China in the not-too-distant future. "Left to its own devices, China has repeatedly demonstrated that it is unwilling to hold up its end of the bargain". It also didn't have details on whether the Asian nation will lift retaliatory duties it imposed on American products such as soybeans and LNG as part of the tit-for-tat tariff war. It kept in place 25% tariffs on $250 billion of other Chinese goods.

The U.S. will review Beijing's compliance with the deal no sooner than 10 months after the signing to determine whether it's worth easing those levies, according to Bloomberg, which cited people familiar with the parameters.

"Together we are righting the wrongs of the past and delivering a future of economic justice and security", he said. And that's what we accomplished.

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