After months of heated rhetoric and threatened tariffs on imports, tensions between the U.S. and China have simmered down as the two countries work to finalize an agreement that would increase the exports of American goods, a cornerstone of the Trump administration's policy goals.
The U.S. and China both agreed to drop their threatened tariffs on one another — the United States' additional 25% tariffs on $150 billion worth of Chinese imports and China's tariffs on $50 billion worth of U.S. exports — Treasury Secretary Steven Mnuchin told CNBC on May 21.
China has also agreed to "immediately" increase its purchase of U.S. farm products by 35% to 40%, Mnuchin said. The White House has said the additional purchases will help reduce the $375.2 billion annual goods and services trade deficit the U.S. runs with the Asian nation.
Still, the agreement has to be approved and finalized, with Mnuchin noting that the United States' threatened tariffs could be implemented should China not follow through on its end of the bargain.
"This is very, very good for our economy — for our farmers," Mnuchin told CNBC. "We'll see. ... We've got to execute on this and China has to execute on this."
The treasury secretary's comments follow two days of negotiations that he was involved in, along with Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and Chinese trade officials on May 17-18, in which both countries agreed to "meaningful increases" in U.S. agriculture exports, according to a joint statement May 19.
"There was a consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China," the U.S. and China said in the statement. "To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services."
President Donald Trump said on Twitter May 21 that the barriers and tariffs would come down for the "first time."
"China has agreed to buy massive amounts of additional farm/agricultural products — would be one of the best things to happen to our farmers in many years," Trump tweeted.
"Under our potential deal with China, they will purchase from our great American farmers practically as much as our farmers can produce," Trump added in a separate tweet later in the morning.
The comments come after three days of hearings on the first iteration of proposed tariffs on $50 billion of U.S. imports from China, panels that were marked by American companies' concern over the impact that the tariffs would have on their production and operations in China.
Mnuchin seemed to walk back comments he made to Fox News on May 20, where he said the "trade war" is on hold. He clarified on May 21 that it was a "trade dispute" and never a full-blown trade war.
U.S. farmers, especially those who harvest soybeans, which is a $12 billion annual export market to China, have expressed concern that China's threatened retaliatory tariffs on their product could decimate production. The administration has not specified which agriculture or energy products would be bought more heavily by Beijing under the agreement.
The U.S. originally introduced its threatened tariffs, which largely targeted aerospace, transportation and technology, on China following a monthslong Section 301 investigation into Chinese trading practices that found the country engaged in the intellectual property theft of American companies doing business there.