By William Mauldin, Alex Leary, Lingling Wei and Bob Davis
President Trump has agreed to a limited trade agreement with Beijing that will roll back existing tariff rates on Chinese goods and cancel new levies set to take effect Sunday as part of a deal to boost Chinese purchases of U.S. farm goods and obtain other concessions, according to people familiar with the matter.
Mr. Trump met top economic and trade advisers on the agreement for an hour Thursday, and senior administration officials were making calls to tout the outlines of an agreement, the people said.
If confirmed, U.S. trade representative Robert Lighthizer and Chinese Ambassador Cui Tiankai are expected to sign at least the outlines of a deal on Friday, said another person familiar with the matter.
Michael Pillsbury, an adviser to the president, said he spoke with Mr. Trump, who said the deal calls for China to buy $50 billion worth of agricultural goods in 2020, along with energy and other goods. In exchange the U.S. would reduce the tariff rate on many Chinese imports, which now ranges from 15% to 25%.
The Wall Street Journal reported earlier Thursday that the U.S. side has offered to slash existing tariff rates by half on roughly $360 billion in Chinese-made goods, in addition to canceling the tariffs on $156 billion in goods that Mr. Trump had threatened to impose on Sunday. That offer was made to Beijing in the past five days or so.
Should Beijing fail to make the purchases it has agreed to, original tariff rates would be reimposed. Trade experts call that a "snapback" provision, though the president didn't use that term, Mr. Pillsbury said.
In what Mr. Pillsbury described as a "goodwill gesture," the U.S. plans to announce some tariff rate cuts on Friday. "The president is upbeat and enthusiastic about his breakthrough," according to Mr. Pillsbury, a China scholar at the Hudson Institute who advises the Trump administration.
The president stressed that the so-called phase one deal, which also includes measures to improve intellectual property protection, open the Chinese financial services market, and prevent currency manipulation, is expected to lead to a phase two deal. That agreement would tackle more difficult problems, including forced technology transfer, subsidies, and the behavior of Chinese state-owned firms.
A spokesman for the Chinese embassy didn't immediately respond to a request for comment.
Mr. Trump declared two months ago the two countries had reached a framework for a limited pact to halt the trade war and allow negotiation on possible future phases. Yet efforts to finalize the terms proved elusive until Thursday, just days before new tariffs targeting iPhones, toys and other consumer goods were set to take effect.
Trade groups hailed Thursday's progress as a welcome respite from what amounts to additional taxes at the border. Importers, retailers and other American firms had worried more duties -- essentially a U.S. tax charged at the border -- will have the effect of raising prices or hurting sales.
"We welcome the news that a U.S.-China phase one deal is imminent," said Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce. "It will bring stability to the U.S.-China relationship, but make no mistake about it: There is still more work ahead and more problems to be solved."
Sen. Marco Rubio (R., Fla.), an outspoken China critic, said via Twitter that the "White House should consider the risk that a near-term deal with China would give away the tariff leverage needed for a broader agreement on the issues that matter the most such as subsidies to domestic firms, forced tech transfers & blocking U.S. firms access to key sectors."
Senate Democratic leader Chuck Schumer (D., N.Y.) led a letter from Democrats saying that "failure to secure commitments from the Chinese government to enact substantive, enforceable, and permanent structural reform will jeopardize American jobs and long-term economic prosperity."
The White House had no immediate on the emerging deal.
"Getting VERY close to a BIG DEAL with China," President Trump wrote in a Tweet Thursday morning: "They want it and so do we!"
If the two countries confirm and sign the limited pact, it will show the Trump administration is eager to follow through on promises to notch new deals with trading partners on the eve of his 2020 election year and possible impeachment.
On Tuesday, House Democrats said they reached a deal with U.S. and Mexican officials on a revised North American trade pact expected to win congressional ratification in coming months.
The phase one deal with China, if completed, would cover only a small portion of the U.S. complaints against China's trade practices, leaving largely untouched such fundamental issues as subsidies and Chinese pressure on American firms to share technology. Many in the U.S. business community remain skeptical that discussions on phase two or phase three deals will bear fruit.
--Tim Puko, Andrew Restuccia and Josh Zumbrun contributed to this article.
Write to William Mauldin at firstname.lastname@example.org, Alex Leary at email@example.com, Lingling Wei at firstname.lastname@example.org and Bob Davis at email@example.com
(END) Dow Jones Newswires
December 12, 2019 18:38 ET (23:38 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.