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As Trump Visits India, a Trade Deal Remains Elusive

Westlake Legal Group 25DC-TRADE-01-facebookJumbo As Trump Visits India, a Trade Deal Remains Elusive United States Politics and Government Trump, Donald J Modi, Narendra milk International Trade and World Market India Customs (Tariff)

WASHINGTON — President Trump’s visit to India includes a state dinner, tens of thousands of cheering onlookers and even a marching band on camels — but a long-awaited trade deal between the United States and India is notably absent.

For the second time since September, when Prime Minister Narendra Modi of India visited the United States, the two countries have failed to reach even a limited “mini-deal” that would increase trade for focused groups of goods, like dairy products, medical devices and Harley-Davidson motorcycles.

Negotiators from both countries have been working since 2018 on a deal that would lower Indian barriers to some American products, and restore India’s access to a program that allows goods to enter the United States tariff-free.

But the breakdown in negotiations illustrates the steep challenge in reaching a trade deal between two countries headed by populist leaders who harbor suspicions of multilateral arrangements. Both Mr. Trump and Mr. Modi want to protect jobs in their own countries by fending off foreign competitors — shared attributes that make it even more difficult to strike a comprehensive agreement that would roll back trade barriers more broadly.

“Both sides are attuned to their own political imperatives and not where the other side might have an area of accommodation,” said Nisha Biswal, president of the U.S. India Business Council, who served as assistant secretary of state for Central and South Asia during the Obama administration. “It is hard, then, to find where the common ground is where a deal could be struck.”

In appearances alongside Mr. Modi on Tuesday, Mr. Trump touted an agreement by India to purchase more than $3 billion of American military equipment, as well as other purchasing agreements related to commercial airlines and natural gas.

He said the two sides had made “tremendous progress on a comprehensive trade agreement” and that he remained optimistic they could reach a deal.

But urgency toward a deal appears to have faded, with both leaders appearing content for trade barriers to continue. Mr. Trump has said he is focused on a larger agreement that could be reached at the end of this year, if the two sides can find common ground.

That may not be easy. During his visit, the president reiterated his previous complaints about India’s high tariffs on American products, including Harley Davidson motorcycles and other goods.

“We’re being charged large amounts of tariffs, and you can’t do that,” Mr. Trump said. “I just said that’s unfair, and we’re working it out.”

He added that “the money you’re talking about is major, but the United States has to be treated fairly. And India understands that.”

Since trade talks began, both the United States and India have escalated tensions by ratcheting up tariffs and trade barriers, rather than lowering them.

In March 2018, Mr. Trump included India in the list of countries that would be hit by his steel and aluminum tariffs. India responded with retaliatory tariffs on American almonds, apples and other goods. Last May, the Trump administration stripped India of a special status that exempted billions of dollars of its exports into the United States from tariffs.

The two sides were close to reaching a modest agreement in early January that would remove barriers for American farmers and medical device makers and strengthen India’s intellectual property protections, among other issues. But new demands — like a U.S. request for India to buy more walnuts and turkeys — kept popping up, delaying an agreement.

India then surprised the Trump administration in February by pledging to raise import duties on more than 100 items, including medical devices, furniture, electronics, cheese and shelled walnuts — a move that became a major stumbling block to the pact’s conclusion.

Mr. Trump’s trade negotiator, Robert Lighthizer, responded by reopening previously settled issues. Then he canceled a planned trip to work out everything in person with Mr. Modi’s commerce minister, Piyush Goyal.

An Indian official briefed on the talks said that India would not be bullied into making an agreement with the United States, especially if those concessions might ultimately hurt Indian interests.

For both India and the United States, the trading relationship is an important one. India was the United States’ ninth-largest trading partner in goods in 2018, while the United States edged ahead of China to become India’s largest trading partner last year.

Edward Alden, a senior fellow at the Council on Foreign Relations, said the outcome showed the limitations of Mr. Trump’s truculent approach to trade, in which he tries to ratchet up pressure on trading partners to force them into making a bilateral deal.

With smaller countries that count the United States as a major market — South Korea, Japan, Canada and Mexico — Mr. Trump has signed a series of small or revised deals. But with bigger economies, Mr. Trump’s one-on-one approach “has really run into roadblocks,” Mr. Alden said.

With China, it resulted in a limited trade deal, but not one that addressed the biggest economic issues between the countries. Negotiations with the European Union have so far failed to progress. And with India, Mr. Trump’s pressure campaign may have backfired, he said.

Alyssa Ayres, also a senior fellow at the Council on Foreign Relations, said India had gradually been moving toward greater economic openness since experiencing a financial crisis in 1991. But in recent years, the Trump administration’s trade tactics may have pushed India in the opposite direction.

“Given that the Trump administration has brought tariffs back as a policy tool, we are setting the wrong example ourselves for these trade moves,” she said.

But Wendy Cutler, vice president of the Asia Society and a former trade negotiator, said the United States was hardly alone in its inability to get India to sign a trade deal.

India has yet to sign a deal with Europe despite years of talks and has fought efforts by the World Trade Organization to update its trade rules, Ms. Cutler said. Progress that the United States and India were making toward a deal “was overshadowed by new tariff and nontariff measures that India was erecting, seriously complicating the talks.”

The Trump administration’s biggest carrot is the restoration of India’s tariff-free status for industries under the Generalized System of Preferences. But that carrot, which waived $200 million a year in tariffs on Indian exports, hardly has the Indian side salivating.

Since Mr. Trump revoked that status, India’s exports of preferential goods like leather handbags, certain metal and plastic products and furniture have increased 5.5 percent, compared with a 1.9 percent increase in overall exports to the United States. That suggests Indian companies are facing little pain from the change in trade status.

“The U.S. needs the trade deal more than India does,” said Mukesh Aghi, the chief executive of the U.S.-India Strategic Partnership Forum, a business group whose members include PepsiCo, Cisco, Mastercard, Boeing and Disney.

The battle over milk and vegetarian cows has been another example of how the two sides can’t seem to find a middle ground.

India produces more milk than anyone else in the world, yet it’s still not enough to meet demand. But India is worried that cheap imported milk from the United States will wipe out many of its 80 million small farmers, who typically tend just a few cows each.

“If our farmers go out of business, there is no one to feed us,” said Ashwani Mahajan, a leader of Swadeshi Jagran Manch, a business group affiliated with India’s ruling Bharatiya Janata Party.

Then there’s the matter of what those cows eat. In the United States, cattle are typically fed ground-up parts of other animals. That does not pass muster with Hindus, most of whom are vegetarian.

Some American farmers are willing to keep cows on a purely vegetarian diet for 90 days before their milk is sent to India, said Tom Vilsack, the chief executive of the U.S. Dairy Export Council and the U.S. agriculture secretary under President Obama.

However, “the Indian government is not willing to accept that,” Mr. Vilsack said. “I don’t see any path forward.”

Ana Swanson reported from Washington, and Vindu Goel from Mumbai, India.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Digital Tax Fight Emerges as Global Economic Threat

Westlake Legal Group 22dc-digitaltax-1-facebookJumbo Digital Tax Fight Emerges as Global Economic Threat Scholz, Olaf (1958- ) Organization for Economic Cooperation and Development Mnuchin, Steven T International Trade and World Market International Monetary Fund Group of Twenty Google Inc Georgieva, Kristalina Ivanova Facebook Inc Customs (Tariff) Corporate Taxes Amazon.com Inc

RIYADH, Saudi Arabia — The world’s top economic leaders warned on Saturday that an international tax fight between the United States and Europe poses a new threat to the global economy if a resolution is not reached this year.

After two years of economic fallout from a trade war between the United States and China, finance ministers and other senior officials at the Group of 20 meeting in Riyadh expressed alarm about an impasse over plans by foreign governments to impose new taxes on American technology companies. If a deal proves elusive in the coming months, European countries will begin collecting levies, which would probably set off retaliatory tariffs from the United States.

“The trade tensions of today would look like they are not so serious compared to the consequences of something like this,” Angel Gurría, secretary-general of the Organization for Economic Cooperation and Development, said in an interview on the sidelines of the G20 on Saturday. “There’s the cacophony, the trade tensions that would invariably follow, and then there’s the impact on growth.”

Several European countries, led by France, have been rolling out digital services taxes, which would hit American companies like Amazon, Google and Facebook. Italy, Spain, Austria and the United Kingdom have all announced plans for digital services taxes, which assess a levy based on the online activity that takes place in those countries, regardless of whether the company has a physical presence.

The O.E.C.D. has been trying to head off a proliferation of disparate tax regimes around the world and has been leading negotiations over the last year for an international overhaul that would allow countries to tax certain digital service providers even if they lack physical operations inside their borders.

Negotiators have set an end-of-year deadline to broker a deal that would set international standards for how, and where, online activity may be taxed. Also under discussion is whether to impose a global minimum tax of sorts on multinational corporations to discourage companies from shifting profits to low-tax countries like Ireland and Bermuda to minimize their tax bills.

The United States, along with the tech industry, has been eager to prevent a proliferation of new digital taxes across the world and has pushed for a global tax regime that would govern all O.E.C.D. countries.

But the talks hit a snag late last year when Treasury Secretary Steven Mnuchin told the O.E.C.D. that the United States wanted American companies to essentially have the option to avoid some of the taxes.

Some administration officials privately express concerns that the global minimum tax under discussion could discourage countries from further reducing their corporate tax rates, as the United States did in 2017. Lower rates, these officials argue, make their economies more attractive to global investment and help companies. Other economists say the competition to lower rates have encouraged firms to shift profits, at least on paper, to tax havens.

The economic impact of the digital services taxes on the United States is relatively small, but American companies fear the levies could evolve to hit a broader swath of sectors beyond tech. A recent analysis by the O.E.C.D. found that the international tax changes under consideration would increase global corporate taxes by about $100 billion.

The taxes have drawn the ire of President Trump, who has criticized Europe’s attempt to collect more taxes from American companies. Last year, Mr. Trump said the United States would retaliate against France’s digital tax by imposing tariffs of up to 100 percent on French products such as wine, cheese and handbags. The United States agreed last month to delay those tariffs and France agreed to delay collection of the taxes in the hope that a more global agreement could be reached.

European finance ministers expressed urgency on Saturday to reach an agreement, hoping to find common ground with the United States and avoid a broader economic conflict.

“Next year is coming very soon,” said Olaf Scholz, Germany’s finance minister. “There is not time to wait for elections.”

But major obstacles remain and the strong opposition to any plan that would allow American companies to opt out of taxes was palpable.

“Clearly, there is a need to avoid any kind of optional solution,” said Bruno LeMaire, the French finance minister. “I do not know of any private company that would choose to be taxed instead of not being taxed.”

Mr. Mnuchin tempered expectations that such a complicated deal could be reached so quickly.

“We are dealing with some of the most complicated international tax issues,” Mr. Mnuchin said during a panel discussion at the Ritz-Carlton Hotel. “In the U.S., depending upon what the solutions are, these may require congressional approval.”

Mr. Mnuchin reaffirmed his view that he believed the European digital services taxes were “discriminatory” but said he was committed to the multilateral process underway so that companies could have clarity over taxes in an increasingly digital economy.

The Treasury secretary also resisted the suggestion that the United States is proposing to make the tax optional, describing the proposal as a so-called “safe harbor” regime in which companies would agree to pay more in exchange for having more certainty over their tax bills.

Failure to reach agreement on either the digital tax or the global minimum tax could scuttle the entire package. Finance ministers from other nations have made clear to Trump administration officials that a large swath of countries will not agree to any deal that allows some large American companies to effectively pick their preferred tax system to minimize their global liability.

But the administration faces competing pressure at home, from businesses and lawmakers. Some multinational companies, including many tech giants, are eager for an agreement that would head off the complications of complying with different digital service taxes in a wide range of countries. Other companies fear the agreement would raise their taxes unexpectedly.

Any deal might need to be ratified by the Senate, where approval would be difficult in any event, but more so if a large group of powerful corporations oppose it.

Still, other countries have pressed the Trump administration to drop its so-called “safe harbor” demands and take a more active role in pushing negotiations toward consensus, starting with the finance ministers meeting this weekend.

The tussle over international taxes comes as the global economy is emerging from a year of sluggish growth made worse by uncertainty from Mr. Trump’s trade war with China and the disruption of global supply chains caused by American tariffs. While economists have projected a rebound this year, amid easing trade tension, the coronavirus outbreak in China represents a new variable that threatens to slow output.

Kristalina Georgieva, the managing director of the International Monetary Fund, said she currently thinks the virus could have a V-shaped impact on China’s economy, causing a sharp drop in growth followed by a rapid recovery with modest spillover to the rest of the world. But she acknowledged that the trajectory of the virus was not clear.

“We recognize that other scenarios could be significantly more impactful,” Ms. Georgieva said at a dinner in Riyadh sponsored by the Institute of International Finance.

The I.M.F. on Saturday downgraded its forecast for China’s economic growth this year by 0.4 percentage points to 5.6 percent and reduced its global growth outlook by 0.1 percentage points to 3.2 percent.

Tax experts who have been tracking the talks fear the chances of reaching a sweeping agreement by the end of the year are slim given the complex internal politics involved in brokering a deal with so many countries.

“The O.E.C.D. process is hanging by a thread and the consequences of failure are underappreciated by European sovereigns,” said Itai Grinberg, an international tax policy professor at Georgetown University Law Center.

If the talks do fail and European countries move ahead with their digital taxes, Mr. Grinberg said, the response from the United States would be forceful, particularly if Mr. Trump is re-elected in November.

“There is a high risk that the O.E.C.D. process is going to crater and that is what is driving the building bipartisan willingness to consider what the retaliatory measures by the United States would be,” he said.

Mr. Mnuchin did offer one option to avert such a fate on Saturday.

“If everybody adopts the U.S. proposal, I have 100 percent confidence we’ll get it done,” Mr. Mnuchin said, eliciting some laughter from his counterparts.

Alan Rappeport reported from Riyadh, Saudi Arabia, and Jim Tankersley from Washington.

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Trump Contradicts Advisers on China Technology Fears

Westlake Legal Group 18DC-TRUMPCHINA-01-facebookJumbo Trump Contradicts Advisers on China Technology Fears United States Politics and Government Protectionism (Trade) Politics and Government International Trade and World Market Customs (Tariff)

WASHINGTON — President Trump publicly objected on Tuesday to efforts within his own administration to restrict the sales of American technology to China because of national security concerns, insisting that such fears are an “excuse” and that the United States is open for business.

The comments, posted on Twitter, appeared to represent a striking reversal of the Trump administration’s aspirations to curb China’s ascent as a global leader in technology and came as cabinet officials were scheduled to meet later this month to discuss restrictions on China.

That Feb. 28 meeting was expected to include a discussion about whether to halt sales to China of an aircraft engine produced in part by General Electric by blocking its license to export the technology. Officials were also expected to consider new rules that would further curtail the ability of Huawei, the Chinese telecom giant, to have access to American technology.

But on Tuesday, Mr. Trump seemed to pre-emptively scuttle such moves and two people familiar with the matter said that the meeting was on hold and that U.S. would not block GE’s ability to sell jet engine parts to China.

“The United States cannot, & will not, become such a difficult place to deal with in terms of foreign countries buying our product, including for the always used National Security excuse, that our companies will be forced to leave in order to remain competitive,” Mr. Trump wrote. “We want to sell product and goods to China and other countries.”

The president went on to say that if the United States does not sell its products for national security reasons, then other countries will step in and do so. Mr. Trump explicitly referenced the jet engine sales.

“As an example, I want China to buy our jet engines, the best in the World,” he said. “I have seen some of the regulations being circulated, including those being contemplated by Congress, and they are ridiculous.”

Mr. Trump said that he has made this sentiment clear to everyone in his administration.

The administration’s efforts to restrict the flow of American technology to China has increasingly triggered objections from companies, who say it undermines their ability to compete on a global scale. Firms say they have already taken steps to limit the American components in their products and may begin to do more research and development outside the United States.

General Electric, in response to media reports on Saturday about the administration’s review of its export license, said in a statement that it would comply with any requirements imposed by the United States but downplayed concerns about the risks of sales to China.

“We aggressively protect and defend our intellectual property and work closely with the U.S. government to fulfill our responsibilities and shared security and economic interests,” General Electric said in a statement. “G.E. has provided products and services in the global marketplace for decades.”

Geng Shuang, spokesman for China’s foreign ministry, criticized the U.S. proposal to halt the jet engine deliveries during a news conference on Tuesday.

“It would expose certain US officials’ ignorance in science and technology, disregard of the market principle, and anxiety with China’s development,” he said during a briefing. “It will be another example of the US using political means to undermine bilateral commercial cooperation and wantonly oppress China.”

Mr. Trump’s description of national security as an “excuse” for interfering in international commerce is surprising given the president’s decision to routinely link economic and national security. The president has cited the need to protect national security in his decision to impose tariffs on foreign metals and to consider placing them on foreign autos. The U.S. has also cited national security in expanding its ability to block international mergers and acquisitions.

The shift in position is also notable given the administration’s ongoing efforts to crack down on Huawei, the Chinese telecom giant that is on a government blacklist. Administration officials were expected to further restrict American sales to Huawei by closing a loophole that has allowed American sales to continue. While the Pentagon initially opposed the effort, fearing it could hurt defense suppliers, it has now reversed its position amid pressure from other administration officials.

John Neuffer, president and chief executive of the Semiconductor Industry Association, welcomed the administration’s shift in tone.

“We applaud President Trump’s tweets supporting U.S. companies being able to sell products to China and opposing proposed regulations that would unduly curtail that ability,” he said in a statement. “As we have discussed with the administration, sales of nonsensitive, commercial products to China drive semiconductor research and innovation, which is critical to America’s economic strength and national security.”

Julian Barnes and David McCabe contributed reporting.

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Trump Administration Will Raise Tariffs on European Aircraft

Westlake Legal Group merlin_146401104_c74e37fa-7183-46b2-9b5b-0fde63e3f4ae-facebookJumbo Trump Administration Will Raise Tariffs on European Aircraft Wines United States Politics and Government International Trade and World Market Customs (Tariff) Airlines and Airplanes

WASHINGTON — The Trump administration said it would raise tariffs on European aircraft in an effort to pressure Europe in a long-running trade dispute over airplane subsidies.

The United States Trade Representative said late Friday that it would increase the duty it had imposed on European aircraft to 15 percent from 10 percent, effective March 18. It also removed prune juice for the list of taxed items, and added a 25 percent tax on French and German butcher and kitchen knives.

The annual value of the goods subject to tariffs would remain at $7.5 billion, as before, the trade representative said.

The tariffs are part of a 15-year-old complaint over subsidies European governments gave plane maker Airbus, which put its American competitor, Boeing, at a disadvantage. In October, the World Trade Organization granted the United States permission to try to recoup its losses by taxing as much as $7.5 billion of European exports annually. Those tariffs are expected to continue until Europe removes its subsidies or the two governments come to a negotiated resolution.

The airplane dispute is just one irritant in an increasingly fraught trading relationship with Europe.

The United States and the European Union remain at odds over France’s plan to tax American technology companies. European officials have also been angry that the United States has effectively paralyzed the W.T.O. by refusing to sign off on new appointees to a crucial appeals panel.

Despite those disputes, the two governments have continued to negotiate to improve trade terms. After announcing plans for a comprehensive trade deal in 2018, both sides appear to have scaled back their ambitions, with officials saying they might settle on a “mini-deal” that would focus on a few sectors.

In a news conference with President Trump in Davos, Switzerland, in January, the European Commission president, Ursula von der Leyen, said she was expecting to reach a trade agreement that she could sign with the United States “in a few weeks.” But details on such an agreement have since been scarce, with few visible high-level meetings.

The tariff changes could put more pressure on Europe to reach a deal. Under U.S. law, the United States Trade Representative is required to periodically revisit and revise tariffs put in place as part of a W.T.O. dispute, to put more pressure on negotiating partners to reach a resolution.

The tariffs that the United States imposed on Europe in October included a 10 percent tax on aircraft from Britain, France, Germany and Spain, and a 25 percent tax on wine, cheese, pork, whiskey, olives and other agricultural products.

Although these levies are permitted under the rules of the W.T.O., they have still raised an outcry from consumers and industries in the United States.

“The Trump administration’s threat of a tariff ‘carousel’ — shifting even one new product onto a list hit with new import taxes — generates even more of the uncertainty that haunts American business and workers,” said Chad Bown, a senior fellow at the Peterson Institute. “Even though there were few changes today, little was resolved, and the administration has made sure that much of that uncertainty will remain.”

Some industries that had been hoping for relief were disappointed when the administration announced their changes to the tariffs Friday night.

Harry Root, founder of the U.S.-Wine Trade Alliance, a group that represents wine distributors and other professions in the United States, said wine tariffs had done disproportionate damage to American businesses and consumers — and that European winemakers had responded by shipping more products to China instead.

Mr. Root said that the administration had heard the industry’s message “loud and clear,” that wine tariffs were inefficient. But when the trade representative published its list Friday night, the 25 percent tariff on European wine remained in place.

American and European negotiators have met to discuss the possibility of a resolution — potentially in the context of negotiations toward a broader trade deal — but so far have failed to reach an agreement.

Airbus’s chief executive, Guillaume Faury, said that regardless of the Trump administration’s tariff adjustments on Friday, the bigger issue for the company was whether Europe and the United States could strike a settlement this summer.

The W.T.O. is expected to rule as early as May on a parallel case, in which Europe has claimed that the United States provides its own unfair subsidies to Boeing. The W.T.O. is expected to give the European Union the go-ahead to apply counter tariffs on American imports to Europe.

Mr. Faury acknowledged that U.S. penalties on products like cognac, wine and other agricultural goods and industrial products hurt small producers. A 10 percent tax applies to European aircraft, though Mr. Faury added Airbus had managed to keep costs “manageable” for U.S. customers.

“It’s a lose-lose situation,” Mr. Faury said. “We think 2020 is the year to put this behind us and move forward as an industry with no tariffs and good competition.”

As tensions have heated up with Europe, the Trump administration has calmed its trade disputes on other fronts.

The Trump administration’s initial trade deal with China went into effect on Friday, with tariffs on more than $110 billion of Chinese goods dropping from 15 percent to 7.5 percent. Tariffs on roughly $250 billion worth of Chinese goods will remain at the 25 percent rate.

Liz Alderman contributed reporting from Paris.

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China Cuts Tariffs on $75 Billion in U.S. Goods. That Was the Easy Part.

Westlake Legal Group 06china-trade-facebookJumbo China Cuts Tariffs on $75 Billion in U.S. Goods. That Was the Easy Part. International Trade and World Market Epidemics Economic Conditions and Trends Customs (Tariff) Coronavirus (2019-nCoV) China

HONG KONG — China on Thursday said it would reduce tariffs on $75 billion worth of American-made goods, a step that signals its intention to hold up its end of a trade truce with President Trump despite the coronavirus crisis unfolding largely within its borders.

That truce most likely will not last long, however, if China does not carry through with the part of the deal Mr. Trump prizes most: a promise to buy about $200 billion in goods from the United States over the next two years.

The move announced on Thursday was widely expected as both sides back down from an increasingly punishing trade war. In January the two governments reached an interim trade pact intended to forestall more tariff increases. The deal represented a freeze on the trade war rather than an end, and the countries have pledged to continue talks.

The United States agreed to reduce tariffs on $120 billion worth of Chinese-made goods as part of that deal, and on Thursday, China reciprocated. China’s Ministry of Finance said that it would essentially halve tariffs it placed in September on American cars, crude oil, soybeans and other goods. The tariff cuts would go into effect on Feb. 14.

Chinese officials on Thursday said that they still hope to eventually eliminate tariffs enacted by both sides. The trade truce left in place most of the new and increased tariffs on $360 billion in Chinese-made goods that Mr. Trump began enacting in 2018, setting off the trade war between the two economic heavyweights.

  • What do you need to know? Start here.

    Updated Feb. 5, 2020

    • Where has the virus spread?
      You can track its movement with this map.
    • How is the United States being affected?
      There have been at least a dozen cases. American citizens and permanent residents who fly to the United States from China are now subject to a two-week quarantine.
    • What if I’m traveling?
      Several countries, including the United States, have discouraged travel to China, and several airlines have canceled flights. Many travelers have been left in limbo while looking to change or cancel bookings.
    • How do I keep myself and others safe?
      Washing your hands is the most important thing you can do.

“The next step of the adjustment depends mainly on the development and changes of the Sino-US economic and trade situation,” the ministry said in a statement. “We hope to work with the United States toward the ultimate elimination of all imposed tariffs.”

Before that next step can happen, China may need to prove to the United States that it plans to buy that $200 billion in goods that it promised in January. That could be difficult for Beijing, which is grappling with one of its biggest challenges of the modern era.

Chinese officials have put major portions of the country on lockdown as they try to contain a coronavirus that has killed hundreds of people and sickened thousands more. Factories and companies across the country have temporarily closed their operations. Major airlines have canceled flights to China.

The outbreak and containment threaten to reduce China’s economic growth, which could blunt its appetite for American-made goods, meat and crops. They also present logistical problems. Many government offices that do not supply essential or emergency services have been closed, while travel within the country has become difficult as the authorities set up checkpoints and limit travel.

In a research note on Wednesday, Fitch Ratings, the ratings firm, said that the country’s economic growth in the January-to-March period could fall by nearly half, to 3 percent compared with a year earlier, if the epidemic is not contained before spring.

The price of oil has fallen in anticipation of lower Chinese demand. China has signaled that it would allow firms to claim force majeure — essentially, recognition that a company cannot meet its obligations because of circumstances beyond its control — for reasons related to the outbreak.

Still, the coronavirus gives China new reasons to hold up its end of the bargain. The trade pact commits China to purchasing $32 billion in American agricultural products over two years. That food could come in handy: Chinese officials have rushed to ensure adequate food supplies and keep grocery bills low despite the containment efforts.

Cao Li contributed research.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

China Cuts Tariffs on $75 Billion in U.S. Goods. That Was the Easy Part.

Westlake Legal Group 06china-trade-facebookJumbo China Cuts Tariffs on $75 Billion in U.S. Goods. That Was the Easy Part. International Trade and World Market Epidemics Economic Conditions and Trends Customs (Tariff) Coronavirus (2019-nCoV) China

HONG KONG — China on Thursday said it would reduce tariffs on $75 billion worth of American-made goods, a step that signals its intention to hold up its end of a trade truce with President Trump despite the coronavirus crisis unfolding largely within its borders.

That truce most likely will not last long, however, if China does not carry through with the part of the deal Mr. Trump prizes most: a promise to buy about $200 billion in goods from the United States over the next two years.

The move announced on Thursday was widely expected as both sides back down from an increasingly punishing trade war. In January the two governments reached an interim trade pact intended to forestall more tariff increases. The deal represented a freeze on the trade war rather than an end, and the countries have pledged to continue talks.

The United States agreed to reduce tariffs on $120 billion worth of Chinese-made goods as part of that deal, and on Thursday, China reciprocated. China’s Ministry of Finance said that it would essentially halve tariffs it placed in September on American cars, crude oil, soybeans and other goods. The tariff cuts would go into effect on Feb. 14.

Chinese officials on Thursday said that they still hope to eventually eliminate tariffs enacted by both sides. The trade truce left in place most of the new and increased tariffs on $360 billion in Chinese-made goods that Mr. Trump began enacting in 2018, setting off the trade war between the two economic heavyweights.

  • What do you need to know? Start here.

    Updated Feb. 5, 2020

    • Where has the virus spread?
      You can track its movement with this map.
    • How is the United States being affected?
      There have been at least a dozen cases. American citizens and permanent residents who fly to the United States from China are now subject to a two-week quarantine.
    • What if I’m traveling?
      Several countries, including the United States, have discouraged travel to China, and several airlines have canceled flights. Many travelers have been left in limbo while looking to change or cancel bookings.
    • How do I keep myself and others safe?
      Washing your hands is the most important thing you can do.

“The next step of the adjustment depends mainly on the development and changes of the Sino-US economic and trade situation,” the ministry said in a statement. “We hope to work with the United States toward the ultimate elimination of all imposed tariffs.”

Before that next step can happen, China may need to prove to the United States that it plans to buy that $200 billion in goods that it promised in January. That could be difficult for Beijing, which is grappling with one of its biggest challenges of the modern era.

Chinese officials have put major portions of the country on lockdown as they try to contain a coronavirus that has killed hundreds of people and sickened thousands more. Factories and companies across the country have temporarily closed their operations. Major airlines have canceled flights to China.

The outbreak and containment threaten to reduce China’s economic growth, which could blunt its appetite for American-made goods, meat and crops. They also present logistical problems. Many government offices that do not supply essential or emergency services have been closed, while travel within the country has become difficult as the authorities set up checkpoints and limit travel.

In a research note on Wednesday, Fitch Ratings, the ratings firm, said that the country’s economic growth in the January-to-March period could fall by nearly half, to 3 percent compared with a year earlier, if the epidemic is not contained before spring.

The price of oil has fallen in anticipation of lower Chinese demand. China has signaled that it would allow firms to claim force majeure — essentially, recognition that a company cannot meet its obligations because of circumstances beyond its control — for reasons related to the outbreak.

Still, the coronavirus gives China new reasons to hold up its end of the bargain. The trade pact commits China to purchasing $32 billion in American agricultural products over two years. That food could come in handy: Chinese officials have rushed to ensure adequate food supplies and keep grocery bills low despite the containment efforts.

Cao Li contributed research.

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U.S. Trade Deficit Shrinks, but Not Because Factories Are Returning

Westlake Legal Group 05DC-trade-deficit-facebookJumbo U.S. Trade Deficit Shrinks, but Not Because Factories Are Returning United States Economy International Trade and World Market Imports Factories and Manufacturing exports Customs (Tariff) China

WASHINGTON — The overall United States trade deficit shrank last year for the first time in six years as the American economy cooled, domestic oil production soared and President Trump waged an aggressive global trade war to rewrite America’s trading terms.

The trade deficit for both goods and services fell to $616.8 billion in 2019, down $10.9 billion from the previous year, according to data released by the Commerce Department on Wednesday.

Both imports and exports fell as American factory activity slowed and businesses and consumers felt the impact of tariffs imposed on China, the European Union, Canada, Mexico and other nations. Total American exports dropped $1.5 billion to roughly $2.5 trillion, while imports fell $12.5 billion to $3.1 trillion.

Soaring domestic oil production was a major factor in the shrinking trade deficit, cutting into imports of foreign crude oil by $30.3 billion last year. Exports of civilian aircraft also fell $12.6 billion last year, reflecting the fallout from the deadly crashes of Boeing’s 737 Max airplane.

But the most dramatic changes in global trade flows occurred with China, the target of Mr. Trump’s biggest economic offensive.

The trade deficit in goods with China shrank $73.9 billion to $345.6 billion in 2019. It was the first drop on an annual basis since 2016, as both the United States and China placed tariffs on hundreds of billions of dollars of each others’ products.

In particular, American imports from China fell sharply in the final two months of the year, as companies worked to avoid tariffs that Mr. Trump has placed on $360 billion worth of Chinese goods and the potential that he could tax nearly everything from China.

Mr. Trump and his advisers have pointed to trends in trade flows as evidence that his trade policies are helping to revive factories and construction sites around the nation.

“This is a blue collar boom,” Mr. Trump said in the State of the Union address on Tuesday evening.

But economists have been skeptical, saying that the country’s factory activity weakened last year, and that the trade flows largely reflect a cooling American and global economy.

Economists say the hefty tariffs Mr. Trump has placed on China have encouraged American consumers to purchase goods from other countries and have not led to an American manufacturing renaissance.

“Tariffs to date have clearly had a significant impact on imports from China,” said Brad Setser, a senior fellow at the Council on Foreign Relations. “They equally clearly have not led to a stronger U.S. manufacturing sector.”

Rather than bringing manufacturing back to the United States, the clash with China has caused American companies and consumers to shift purchases to other countries, like Mexico, Vietnam and South Korea, said Mary E. Lovely, a senior fellow at the Peterson Institute for International Economics.

Data released Wednesday morning showed the trade deficit in goods with Mexico increased $21.1 billion last year to a record $101.8 billion, as the United States brought in more goods from its southern neighbor. The trade deficit in goods with Canada grew by $8 billion, while the gap with Taiwan increased by $7.8 billion.

“You’re going to see this rearrangement of the deck chairs,” Ms. Lovely said.

The trade deficit in goods with the European Union also expanded to a record $177.9 billion in 2019, presaging Mr. Trump’s next conflict. In recent weeks, Mr. Trump has said that his attention was shifting to Europe now that he has signed trade deals with China, Japan, Canada and Mexico.

Mr. Trump has criticized Europe for selling more to the United States than it buys and has accused its central bank of pushing down the value of the euro to make it easier for European companies to compete against American rivals. His administration is already imposing tariffs on Europe over airplane subsidies, and is threatening further levies in response to its digital taxes and on its cars.

Many economists have predicted that Mr. Trump’s trade deal with China would give businesses more certainty about trading conditions and cause imports from China to rebound, at least in part, in the coming months.

But the spread of a deadly coronavirus has thrown those predictions into question. China has shuttered factories, canceled flights and placed entire cities on lockdown to stop the spread of the virus, weighing heavily on trade. And China may delay some of its planned purchases of American goods as a result.

Mr. Trump has long pointed to the United States trade deficit — the gap between what America exports and what it imports — as proof that America is at a competitive disadvantage because of unfair practices by China and other countries.

In the president’s view, American businesses would be making more at home and consumers would be buying more domestic goods if countries like China weren’t subsidizing their industries and manipulating their currencies to make their products cheaper.

But economists argue that the trade deficit is a poor metric for measuring the health of the economy or America’s trading relationships. While a falling trade deficit can be a sign of a growing economy, the measure can fall for a variety of other reasons, many of them unrelated to trade and not all of them positive.

Mr. Setser said that a falling trade deficit can sometimes be a sign of the kind of manufacturing boom that the Trump administration has been trying to engineer. In that case, American factory production would be rising, displacing foreign products from the American market and causing imports to fall and exports to rise.

But that is not the situation the United States finds itself in, he said. Instead, factory activity has been weak, and both American imports and exports have contracted, he said.

In addition, tariffs and trade uncertainty appear to have cut into business investment, slowing economic growth.

Speaking at an event at George Washington University on Tuesday, Janet L. Yellen, the former Federal Reserve chair, said that the bilateral trade deficit between the United States and China was “not the proper focus.”

Ms. Yellen said that Mr. Trump and some of his advisers see the trade gap “as a symptom of relationships being unfair.” But for many economists, a country’s overall trade deficit with the rest of the world just means that country is spending more than the output it can produce itself, she said.

“Most economists think that a country’s savings and investment are decisions that aren’t affected by trade policy,” she said.

Economists point to another major reason focusing on the trade deficit can be misleading: The gap with China is exaggerated because of how the data is calculated. United States trade data counts the entire value of a good as coming from the country it was assembled in.

China is still a global center for assembling products like smartphones and laptops, but many of the components and the technology that goes into these goods are made elsewhere.

Take a smartphone, for example. A touch screen might be made in Taiwan, or a microprocessor in South Korea. The chips may come from American companies like Qualcomm or Texas Instruments, and the product may have been developed and marketed in the United States.

All of those companies and their employees will receive a share of the final profits. But if all of those components are assembled in China before being shipped to the United States, trade statistics will record the entire value of the phone as being generated in China.

Economists say this method of measurement may exaggerate the trade deficit with China, perhaps by as much as one-third.

Some analysts do see a victory for the United States in the falling trade deficit with China: those in Washington who see China as an increasing national security threat.

China’s profits from what it sells to the United States and other nations helps fund its efforts to expand its influence around the globe, like its Belt and Road infrastructure building project, activities that do not benefit the United States, said Derek Scissors, a resident scholar at the American Enterprise Institute.

“I’d rather put the hard currency in the hands of the South Koreans, the Vietnamese. And normal economists just don’t think that way,” he said.

“Economists will say, ‘Oh great, the president has had success on a meaningless indicator he made up for political reasons,’” Mr. Scissors added. “I agree with that. But I want to trade more with my friends” and less with dictators, he said.

Jeanna Smialek contributed reporting from Washington.

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U.S. Trade Deficit Shrinks Amid Trump Trade War

Westlake Legal Group 05dc-trade-facebookJumbo-v2 U.S. Trade Deficit Shrinks Amid Trump Trade War United States Economy International Trade and World Market Imports Factories and Manufacturing exports Customs (Tariff) China

WASHINGTON — The overall United States trade deficit shrank last year as the American economy cooled and President Trump waged an aggressive global trade war to rewrite America’s trading terms.

The trade deficit for both goods and services fell to to $616.8 billion in 2019, down $10.9 billion from the previous year, according to data released by the Commerce Department on Wednesday.

Both imports and exports fell as American factory activity slowed and businesses and consumers felt the impact of tariffs imposed on China, the European Union, Canada, Mexico and elsewhere. Total American exports dropped $1.5 billion to roughly $2.5 trillion, while imports fell $12.5 billion to $3.1 trillion.

The most dramatic changes in trade last year occurred with China, the target of Mr. Trump’s biggest economic offensive.

The trade deficit in goods with China shrank $73.9 billion to $345.6 billion in 2019. It was the first drop on an annual basis since 2016, as both the United States and China placed tariffs on hundreds of billions of dollars of each others’ products.

American imports from China fell sharply in the final two months of the year, as companies worked to avoid tariffs that Mr. Trump has placed on $360 billion worth of Chinese goods.

Rather than bringing manufacturing back to the United States, the clash with China has caused American companies and consumers to shift purchases to other countries, like Mexico, Vietnam and South Korea instead, said Mary E. Lovely, a senior fellow at the Peterson Institute for International Economics.

Data released Wednesday morning showed the trade deficit with Mexico increased $21.1 billion last year to $101.8 billion as the United States brought in more goods from its southern neighbor.

“You’re going to see this rearrangement of the deck chairs,” Ms. Lovely said.

Mr. Trump has long pointed to the United States trade deficit — the gap between what America exports and what it imports — as proof that America is at a competitive disadvantage because of unfair practices by China and other countries. In Mr. Trump’s view, American businesses would be making more at home and consumers would be buying more domestic goods if countries like China weren’t subsidizing their industries and manipulating their currencies.

But economists have argued that the figure is a poor metric for measuring the health of the economy or America’s trading relationships. While a falling trade deficit can be a sign of a growing economy, the measure can fall for a variety of other reasons, many of them unrelated to trade and not all of them positive.

Speaking at an event at George Washington University on Tuesday, Janet L. Yellen, the former Federal Reserve chair, said that the bilateral trade deficit between the United States and China was “not the proper focus.”

Ms. Yellen said that Mr. Trump and some of his advisers see the trade gap “as a symptom of relationships being unfair.” But for many economists, a country’s overall trade deficit with the rest of the world just means that the country is spending more than the output it can produce itself, she said.

“Most economists think that a country’s savings and investment are decisions that aren’t affected by trade policy,” she said.

Brad Setser, a senior fellow at the Council on Foreign Relations, said that a falling trade deficit can sometimes be a sign of the kind of manufacturing boom that the Trump administration has been trying to engineer. In that case, American factory production would be rising, displacing foreign products from the American market and causing imports to fall.

But that is not the situation the United States finds itself in, he said. Instead, factory activity has been weak, and both American imports and exports have contracted, he said.

In addition, tariffs and trade uncertainty appear to have cut into business investment, slowing economic growth.

“Tariffs to date have clearly had a significant impact on imports from China,” Mr. Setser said. “They equally clearly have not led to a stronger U.S. manufacturing sector.”

Jeanna Smialek contributed reporting from Washington.

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Trump Expands Steel Tariffs, Saying They’ve Fallen Short of Aim

Westlake Legal Group 24DC-TRADE-01-facebookJumbo Trump Expands Steel Tariffs, Saying They’ve Fallen Short of Aim United States Economy Trump, Donald J Steel and Iron Protectionism (Trade) Prices (Fares, Fees and Rates) International Trade and World Market Customs (Tariff) Aluminum

WASHINGTON — President Trump has announced plans to broaden his tariffs on foreign steel and aluminum, saying the existing tariffs had not proved as effective as he had hoped in reviving American production.

In a proclamation on Friday night, the president accused foreign companies of trying to “circumvent” the 25 percent tariff he placed on foreign steel and the 10 percent tariff he placed on foreign aluminum in 2018. Imports of steel and aluminum into the United States have declined since the tariffs went into place, he said, but imports of products made with those metals had “significantly increased.”

The net effect “has been to erode the customer base for U.S. producers of aluminum and steel and undermine” the effect of original tariffs, Mr. Trump said.

As a result, he said, the United States will expand its tariffs to cover products made of steel and aluminum — like nails, tacks, staples, cables, certain types of wire, and bumpers and other parts for cars and tractors — as of Feb. 8.

For American companies making these products, the announcement came as a relief.

Jeff Ferry, the chief economist at the Coalition for a Prosperous America, a trade group that counts companies making steel, cables and other products among its membership, called the measure “a wise move.”

“What we’ve seen with the steel and aluminum tariffs is that it has stimulated both of those industries, leading to additional capital investment and additional jobs,” he said, adding that he expected the new tariffs to stimulate the new industries as well.

For economists and trade experts, however, it was an “I told you so” moment.

Economists have long argued that by raising the price of steel and aluminum, Mr. Trump’s tariffs would make it more expensive to produce things like nails or cars in the United States — and would encourage companies to import more of those items, rather than making them in the United States.

Chad Bown, a senior fellow at the Peterson Institute for International Economics, called this an example of “cascading protectionism” that he said was “entirely predictable.”

“Trump’s steel and aluminum tariffs have raised the cost of key inputs, making American companies that rely on those metals less competitive worldwide,” Mr. Bown said. “Now Trump is expanding his tariffs to shield their products from competition as well. Where will it end?”

Richard E. Baldwin, a professor of international economics at the Graduate Institute of International and Development Studies in Geneva, wrote on Twitter that Mr. Trump was learning this particular lesson in economics “one failure at a time.”

In his order expanding the tariffs, Mr. Trump pointed to large increases in imports of certain products made of steel and aluminum. From June 2018 to May, imports of items including steel nails and staples rose 33 percent from a year earlier, the order said. Imports of aluminum wire and cable were up 152 percent over the same period.

“This is really the blowback on the tariffs,” Lisa Reisman, executive editor of MetalMiner, an industry publication, said in an email.

Mr. Trump has declared that his trade policies are delivering on his promises to revive the manufacturing sector by sheltering American businesses from unfair competition and encouraging companies to move factories back to the United States.

But a study released by two economists at the Federal Reserve in December showed that the costs of Mr. Trump’s trade approach to China had outweighed its benefits for manufacturers.

Tariffs offered American companies some protection from Chinese imports, the study showed. But those positive effects were more than offset by the negative effects of the trade war, including the higher prices companies must pay to import components from China, and the retaliatory tariffs China had placed on the United States.

American producers of steel and aluminum have supported the tariffs, though they acknowledge that they have not been a panacea for the industry.

United States steel producers operated their plants at 82.7 percent of capacity in the week through Jan. 18, up from 80.4 percent in the same week a year earlier, according to the American Iron and Steel Institute, a trade group. But in his order, Mr. Trump said capacity utilization had not stabilized above 80 percent, the administration’s goal.

Large steel companies have ramped up their investment since the tariffs came into effect, however. In the first nine months of 2019, United States Steel invested $978 million in its facilities, up more than 50 percent from the same period a year earlier, while capital investment at Nucor, a competitor, surged 58 percent.

But the companies have had to grapple with a steel price that is well off its recent high. U.S. Steel announced last month that it was indefinitely idling part of a plant near Detroit, sending layoff notices to roughly 1,500 employees. Some industry analysts continue to point at China, which produced steel at a record level in 2019.

At the same time, trade experts have questioned the legal basis for Mr. Trump’s continuing to make revisions to his metal tariffs.

The Trump administration has said Section 232 of a 1962 trade law, the legal provision it used to issue the tariffs, gives the president broad powers to impose tariffs to protect American industry for matters of national security. The administration has argued that domestic capacity to make iron and steel is essential for national defense and issued broad tariffs globally, before later carving out some exemptions for Argentina, Australia, Canada, Mexico, Brazil and South Korea.

But in a preliminary decision last year, the United States Court of International Trade gave a narrower interpretation of that statute, arguing that the president must act within certain periods that have already expired.

Ana Swanson reported from Washington, and Peter Eavis from New York.

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China Poised to Buy More From U.S., at the Expense of U.S. Allies

Westlake Legal Group 22china-trade-01-facebookJumbo China Poised to Buy More From U.S., at the Expense of U.S. Allies United States International Relations United States Economy United States Trump, Donald J Politics and Government International Trade and World Market Economic Conditions and Trends Customs (Tariff) China

DAVOS, Switzerland — When the United States and China reached a temporary truce in their costly trade war last week, many wondered how Beijing could live up to its commitment to buy $200 billion more of American-made goods over two years. Surely, critics said, China will either renege on the deal, or it will switch to buying products from American farms and factories that it is currently purchasing from other countries.

In the halls of Davos this week, where global leaders gathered at the World Economic Forum to discuss fraying international ties, two realities were becoming clear: China plans to honor the deal, and everybody except the United States may be about to lose a lot of business.

The United States and China are already gearing up for the sale of tens of billions of dollars in American-made products to Chinese buyers in the coming months, according to people familiar with the thinking of officials in both countries. If carried through, that would strengthen President Trump’s election-year claims of achieving victory in his trade war with Beijing.

The two sides are also clear on what that means for other countries. China could pull off those purchases only if it stops buying a lot of farm products and merchandise from countries in Europe, Latin America and East Asia. Many of those countries are American allies, and some are not pleased at the prospect of losing China and its giant economy as a consumer of their exports.

In public, American officials have sought to reassure allies. “It is a great fear. Many of them have expressed it to me,” said Commerce Secretary Wilbur Ross at a news conference in Davos on Thursday. “I think it is unfounded.”

He cited the example of China purchasing more American oil and gas, with which European suppliers do not compete.

Political shifts or economic turmoil in either country could upset plans for China to buy more American goods. Still, should China soon begin to purchase the billions of dollars of American goods at the expense of Washington’s allies, it would highlight a central irony of the trade truce.

The United States has long complained that Beijing controls the levers of Chinese trade and uses them for political advantage. State-run grain companies buy American soybeans. State-run airlines buy Boeing planes. When Beijing is displeased with Washington, it can shift those purchases elsewhere, hurting American workers. The United States has called for the Chinese government to relax its grip and allow freer, fairer trade.

Freer, fairer trade would have made last week’s deal virtually impossible, however. Chinese businesses would not and could not buy $200 billion more in American grain, energy and equipment over two years unless they were told to by Beijing. The trade pact allows Chinese buyers to go elsewhere if American goods are more costly than products from other countries, but Beijing can tell state-run companies that they have more than profitability to think about.

European and Latin American countries that won business when China cut off American purchases could lose that new business. The American businesses that lost those sales would get them back and then some.

American allies have other reasons to dislike the trade pact. The agreement locks in place 25 percent American tariffs on a wide range of high-tech, Chinese-made goods subsidized by Beijing, from electric cars to commercial aircraft to farm equipment.

That could divert Chinese exports of manufactured goods to markets in Europe and elsewhere. European countries want to make and sell their own electric cars and Airbus aircraft, instead of being flooded with Chinese alternatives at prices held artificially low through government subsidies.

The so-called Phase 1 deal is the latest sign of the Trump administration’s unilateral approach to trade and China.

Many trade experts have long urged the American government to put up a united front with European companies and others that have complained about China’s trade practices. Instead, the United States has picked trade fights with allies like Mexico, Canada, South Korea, Japan and Europe. It has rejected international agreements that could have challenged China, such as the Trans-Pacific Partnership accord, and worked to undermine the enforcement abilities of the World Trade Organization, the global trade referee.

“In a worrying return to 19th century practices of managed trade, the ‘shopping list’ imposed by the deal could be seen as going against the rules-based international trading system,” said Joerg Wuttke, the president of the European Chamber of Commerce in China.

For now, Chinese willingness to buy American goods could cover a wide range of industries.

The published text of last week’s agreement sets clear numerical targets for large increases in American exports to China in four categories: manufactured goods, agriculture, energy and services. But officials have described an unpublished annex that specifies large increases in a long list of subcategories.

Many of the subcategories highlight products that China currently imports from Europe and East Asia, in the case of manufactured goods, or Latin America, for many agricultural goods. The trade agreement does almost nothing to change China’s rules so as to increase its total purchases of foreign goods, instead leaving it to the Chinese government to reallocate orders toward American exporters.

Over the past quarter century, China has managed its trade so that it has fairly consistently sold about $4 worth of goods to the United States for each $1 of goods that it bought. China’s trade with Europe has been more balanced, in part because Europe has often been seen as a politically safer choice in Beijing given China’s often rocky relationship with the United States.

But in the last several months, China has concluded that its huge trade imbalance with the United States has become a source of danger and instability, people familiar with the bilateral relationship said in interviews while insisting on anonymity because of political sensitivities. The imbalance has produced demands from the United States for fundamental changes in the Chinese economy, like an end to many subsidies, that are unacceptable, they said.

Beijing’s conclusion, the people said, is that the trade imbalance with the United States must be narrowed sharply this year and next. While that narrowing may hurt the interests of companies and farmers in Europe and elsewhere, those affected by it should realize that they enjoyed extra sales to China over the past two years during the trade war with the United States, they added.

Beijing has already begun ramping up its broad interagency process for managing trade to make sure that American companies receive the extra orders promised under the agreement. In speeches, Chinese officials emphasized that they want to keep commitments to buy imports, although they have publicly glossed over the extent to which the Phase 1 agreement with the United States will divert trade away from other countries.

“Openness has become a trademark of today’s China,” said Han Zheng, a vice premier and one of the seven members of China’s ruling Standing Committee of the Politburo, in a speech at Davos on Tuesday.

Despite the potential loss of business, some American allies like Japan say the greater economic certainty created by the deal is beneficial. Although Japan is likely to lose some export orders to the United States, it nonetheless welcomed the agreement, said Takeshi Niinami, a member of Prime Minister Shinzo Abe’s economic policy council who is also the chief executive and president of Suntory Holdings, a big beverages company.

The trade deal eases tensions between the United States and China and improves political stability and security in East Asia, Mr. Niinami said. It makes it easier for Japan, one of America’s closest allies, to invite President Xi Jinping of China for a possible visit this year, he said.

China has a strong incentive to abide by the agreement. With its economy slowing, Beijing is trying to revive consumer and investor confidence at home by emphasizing that the trade war is over.

The pact will allow the United States to scrutinize its monthly trade figures to see whether the surge in American exports to China has begun. So the Trump administration could restart the trade war with a unilateral imposition of tariffs on Chinese goods if China’s purchases falls short.

In interviews over the past month, people familiar with Chinese policymaking have made clear that Beijing officials do not want to intervene in the presidential elections in November. Indeed, their hope is that the trade deal will make China less of a political punching bag during the campaign this year.

But if the American trade deficit with China does narrow precipitously this year, Mr. Trump may well cite that as a success — particularly in Rust Belt states where trade has been a particularly potent political issue for several decades. Those regions have also tended to be crucial swing states in recent presidential elections.

Mr. Trump spoke enthusiastically about Mr. Xi in Davos on Tuesday, repeating that he was a good friend.

“He’s for China, I’m for the U.S., but other than that we love each other,” Mr. Trump said.

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