President Donald Trump said the initial China trade deal announced Jan. 15 could lead to the ending of the trade tariffs if the two governments can follow that up with a more complete, so-called phase two trade agreement.
Speaking at the White House signing ceremony, Trump said he would end the tariffs that have proven controversial for manufacturers if the two governments can reach agreement on a comprehensive trade pact.
"I will agree to take those tariffs off if we are able to do phase two," said Trump, noting that 25 percent tariffs on $250 billion in Chinese imports that include many plastics-related goods would remain, along with some other tariffs. "I'm leaving them on because otherwise we have no cards to negotiate with. … They will all come off as soon as we finish phase two."
The first phase announcement was met with cautious praise by some plastics industry and manufacturing leaders, who said they hoped it would stabilize relations between the two countries.
"This agreement is a step in the right direction, and we hope it paves the way forward for a reduction, or elimination, in tariffs, an increase in market access, and a less adversarial relationship between the world's two largest economies," Tony Radoszewski, president and CEO of the Washington-based Plastics Industry Association, said.
"We look forward to further negotiations that level the playing field for U.S. plastics companies to compete in global trade," he said.
As well, Jay Timmons, the president and CEO of the National Association of Manufacturers, said that the agreement is the most that any U.S. administration had achieved in trade talks with China. But he also said that the NAM wanted to review specific details in the pact.
"It is a remarkable turning point for manufacturers, with the unprecedented and enforceable commitments on critical intellectual property protections to which China has agreed," Timmons said. "The NAM looks forward to reviewing the final text of this agreement and to working with the administration in holding China accountable for its ambitious commitments."
The Trump administration said the agreement includes commitments by China to stop forced technology transfer and address issues around intellectual property, including trade secrets and enforcement against counterfeited products.
As part of the deal, the Trump administration said China has agreed to increase purchases of U.S. imports by $200 billion over the next two years, including $75 billion in manufactured goods, along with at least $80 billion in agricultural products and $50 billion in energy.
But other manufacturing analysts questioned the impact of the preliminary trade agreement, saying it left untouched more substantive concerns like the use of subsidies and overcapacity in industrial sectors.
"Was this deal worth the pain?" Scott Paul, president of the Alliance for American Manufacturing, wrote on Twitter Jan. 15. "In short, not really. [It] punts on big issues. Purchase agreements largely restore status quo. For American manufacturing workers, there's not much upside."
But in a Jan. 14 letter, the AMM defended the use of tariffs to maintain pressure on China and said it recognized the Trump administration's efforts on a difficult problem.
Tariffs on plastics-related products have proven controversial within the industry.
The American Chemistry Council and the materials industry have strongly argued against them, noting that those companies have a trade surplus with China and want to preserve market access and not face retaliatory tariffs on their exports.
But other sectors, like mold makers, have a trade deficit with China and have equally strongly defended tariffs as necessary to protect against what they see as unfair competition.