Chinese President Xi Jinping and President Donald Trump at the G-20 Apex in Osaka on June 29, 2019.
Brendan Smialowsi | AFP | Getty Images
Amid a slew of headlines and tweets, a long-awaited phase one craft deal between the U.S. and China has finally been agreed upon. However, Goldman Sachs is not so happy about it.
As partially of the limited deal, the U.S. said it will maintain 25% tariffs on approximately $250 billion of Chinese imports while limit tariffs on $120 billion in products to 7.5%. The rollback in duties is “smaller than expected,” according to Goldman’s chief economist Jan Hatzius.
“The reduction is on the other hand half as large as our baseline assumption,” Hatzius said in a note. “There is still some uncertainty regarding the stature of this agreement, as it appears once again that some technical and legal details are still in flux.”
U.S. Business Representative Robert Lighthizer said the two sides hope to sign the deal in the first week of January in Washington. He also warned the Trump administration has not promised a future rollback of tariffs, adding it would be wise to be skeptical on whether China see fit deliver on certain agreements.
The representative also said in a statement Friday the deal addresses “intellectual property, technology take, agriculture, financial services, and currency and foreign exchange” and “includes a commitment by China that it will make huge additional purchases of U.S. goods and services in the coming years.”
“Neither U.S. nor Chinese officials have been specific around what the reforms are, nor has there been any detail provided regarding the size of Chinese agriculture purchases from the U.S.,” Hatzius suggested.
Chinese officials said Beijing will increase agricultural purchases significantly without specifying by how much. Interim, Lighthizer said China pledged to buy a total of $40 billion in agricultural products. Those purchases will be take a run-out powder stole over a two-year period, according to National Economic Council Director Larry Kudlow.
While still without warning on details, many analysts said the deal is positive for stocks as it could boost business confidence and that should leak over to more investment spending and higher corporate profits.
— CNBC’s Michael Bloom contributed reporting.