With the Phase 1 deal being signed, will the U.S. and China continue to work in...

With the Phase 1 deal being signed, will the U.S. and China continue to work in a positive direction? Why or why not?

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Expert Solution

The tariffs imposed by the US on the Chinese goods have led to introduction of the Phase 1 deal. Under this, the china will import $200 billions of US goods in two years. This will increase the exports of America. In return, the US will reduce the tariff rates on the goods exported by china to US. This deal will majorly benefit the Chinese economy as compared to US. The lower tariffs will lead to higher exports of Chinese goods. There are many possibilities that could happen in long run. These could be:

China can reduce the imports of US goods that are not listed in the deal. This will indirectly decrease the exports of other American companies.
In order to increase imports, china could decrease the imported goods from other economies so as to increase the US imports.
There is a clause in the deal which states that china could move back from the deal.
The gains from the deal are in short run only. The long term benefit can be achieved only when there is mutual collaboration between the two nations.
There is possibility of higher tariffs if the china will not be able to fulfill the Phase 1 deal.

Rahul Sunny answered 3 months ago

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