President Trump portrayed the “Phase 1” agreement he announced on Friday with China with typical fanfare, describing the pact as “massive” and “the largest contract” ever signed.
“We made a fantastic deal,” Mr. Trump said during remarks on Tuesday at the White House.
There are good reasons to be skeptical about those claims. The deal appears likely to benefit American farmers by increasing Chinese purchases of agricultural goods and gives some other businesses more access to the Chinese market. But the “agreement in principle” is limited in scope, and exact details have yet to be put in writing — a process that has derailed negotiations with China in the past.
American officials said Friday that they would work with China on completing an initial agreement in the coming weeks, with hopes of signing a deal when Mr. Trump and President Xi Jinping attend a summit of global leaders in Chile in mid-November.
Here’s what we know so far about what the agreement might contain.
What’s in the Deal
From Mr. Trump’s perspective, the centerpiece of the pact is a commitment by China to buy $40 billion to $50 billion of American agricultural products per year. Administration officials said that target would be reached in the second year of the pact’s enactment.
That volume would be a huge increase over what China was buying before the trade war. American farm exports to China peaked at around $25.5 billion in 2016, according to the American Farm Bureau, then dipped to $24.3 billion in 2017.
Since then, exports of soybeans, pork and other products have collapsed under pressure from the trade war. American farm exports to China fell to just $13.4 billion in 2018, and are on track for a similar total this year, according to the same data.
American officials have not specified which products would be purchased, or how they arrived at a $50 billion figure. But to many analysts, that level of exports seems hard to achieve. Mr. Trump himself acknowledged this on Saturday, saying on Twitter that “there is a question as to whether or not this much product can be produced.”
“Our farmers will figure it out. Thank you China!” the president added.
One factor that could sharply drive up China’s imports is its African swine fever epidemic. China has already lost about 40 percent of its hog herd to the sickness, increasing demand for foreign pork and other meats.
The $50 billion target may also include a generous estimate of how other parts of the agreement would affect sales. American officials said they had negotiated speedier food safety checks for imports into China and approvals for genetically modified products, both of which could bolster trade.
Geng Shuang, a Chinese Foreign Ministry spokesman, confirmed at a news conference Tuesday that China would speed up its purchases of American farm goods. “What the U.S. is saying is the actual situation, which is consistent with what we know,” he said.
No New Tariffs, for Now
From China’s perspective, the biggest win is a promise by Mr. Trump to cancel an Oct. 15 tariff increase, when taxes on $250 billion of Chinese goods were set to rise to 30 percent from 25 percent.
American officials could also cancel plans to impose a 15 percent tax on roughly $150 billion of additional goods in December if things go well.
But that still leaves a huge part of tariffs intact. Since the start of the trade war, the United States has imposed tariffs on more than $360 billion of Chinese products, while China has placed tariffs on roughly $100 billion of American imports.
Opening China’s Financial Markets
Trump administration officials said that China had pledged to open its markets to American financial services firms, and that banks and credit card companies would be the primary beneficiaries. But few details have been offered, and many of these changes are already in the works for other countries.
Under heavy American pressure, China has announced a series of moves over the past two years to open up its banking and other financial services sectors, allowing higher levels of foreign ownership or even removing ownership caps entirely. But China is unilaterally opening up its financial services sector to businesses from all over the world, not just from the United States.
Some trade experts say the gains to American companies may be limited, pointing out that China has delayed opening its markets for so long that Chinese companies already dominate the financial sector.
Protecting Intellectual Property
The White House began the trade war over concerns about China’s treatment of American intellectual property, including what the administration called outright theft of technology and trade secrets.
Mr. Trump said Friday that some measures concerning intellectual property and technology transfer would be included in the “Phase 1” agreement, with additional protections included in later phases. Officials have given few details, though people briefed on the negotiations said the measures included stronger protection for copyrights and patents.
Chinese negotiators have pointed to a foreign investment law passed this year as evidence that they have resolved some of the Trump administration’s concerns. That law contained assurances that China would even the playing field for foreign and domestic businesses, but it had few details. The crucial enforcement regulations are not scheduled to be issued until January.
New Rules for Managing Currency
The agreement also includes new guidelines for how China manages its currency — provisions aimed at resolving American complaints that China has intentionally weakened its currency to make its exports cheaper.
People briefed on the agreement said the provisions looked similar to the currency chapter in the Trump administration’s revised North American Free Trade Agreement. It also closely resembles a pledge that China gave when the Group of 20 nations’ finance ministers gathered in Shanghai in February 2016. Both texts call for countries not to devalue their currencies to achieve a trade advantage and to inform each other if they intervene by buying and selling large amounts of currency.
Some experts question whether requiring the Chinese government to disclose more data will do much to curb intervention. Beijing could respond by doing more of its intervention almost invisibly through state-owned banks, and there are some signs in Chinese data it has already begun doing so.
“The more disclosure there is of China’s formal intervention, the more China is likely to rely on shadow intervention,” said Brad W. Setser, a senior fellow at the Council on Foreign Relations and a Treasury official in the Obama administration.
A big question has been whether China will stick to the promises it makes. Robert Lighthizer, Mr. Trump’s top trade negotiator, said the pact would set up “a very elaborate consultation process” with “escalation in various areas so that difficulties can be resolved.” But he added that the details were still being worked out.
American officials have emphasized that their current tariffs, and the threat of future ones, will act as an enforcement mechanism. If China violates the agreement, the Trump administration could move forward with additional tariffs on Chinese products. And if China follows through on its promises, some of Mr. Trump’s existing tariffs could be rolled back.
No agreement has yet been signed, and some of it remains unwritten. Mr. Trump said Friday that the deal was “subject to getting everything papered,” but added that he did not foresee a problem with that process.
But the United States and China have reached trade truces before — in Buenos Aires last December and in Osaka, Japan, in June — only to see them quickly crumble. That has left some critics hesitant.
“A deal that isn’t written down isn’t a real deal,” Senator Ron Wyden, Democrat of Oregon, said in a statement.
Longstanding concerns about Chinese economic policies that put American companies at a disadvantage do not appear to have been addressed.
These policies, which are often called “structural issues,” include China’s generous subsidies to certain companies, the outsize role of the government in the economy and its systematic discrimination against foreign firms. In particular, the Trump administration has often criticized Beijing’s ambitious plan to dominate cutting-edge technologies like advanced microchips, artificial intelligence and electric cars, called Made in China 2025.
China has fiercely resisted any American demands that it sees as efforts to interfere with how it runs its economy. Negotiators have discussed some measures, like requiring China to disclose more information about how it subsidizes its industries, and people familiar with the talks say such talks will continue. But American officials made no mention of these issues with regard to the initial agreement.
The agreement also excludes provisions related to the manufacturing sector. And it appears to allow China to retain, for now, its high tariffs on American-made cars.
That is notable, because nonagricultural goods — including cars, car parts and aircraft — account for both the bulk of American exports to China and the very large American trade deficit with China that Mr. Trump has criticized.
Mr. Trump tweeted on Saturday that the deal would include $16 billion to $20 billion in purchases of Boeing planes, but American officials have not shared any other details.
Data and ‘21st Century’ Protections
Officials have made no mention of a point that is as crucial for American competitiveness as it is hard to resolve: China’s treatment of data.
Chinese laws block multinational companies from moving much of the data they gather on Chinese customers out of the country, meaning that many technology and retail companies must silo off their China business from the rest of their global operations. Chinese officials insist this is a matter of national security and have signaled they are unlikely to yield on this point.