Trump, China announce 'Phase One' trade deal

President TrumpDonald John TrumpTrump says inviting Russia to G7 'a question of common sense' Pentagon chief does not support invoking Insurrection Act Dershowitz: Does President Trump have power to declare martial law? MORE and China on Friday announced that they had reached a "phase one" trade deal that would see a reduction in tariffs from both sides and increase China's purchases of U.S. agricultural products.

"We have agreed to a very large Phase One Deal with China," Trump announced on Twitter, adding that negotiations on "Phase 2" of the deal would begin immediately, rather than after the 2020 election.

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Trump and his administration pushed back at reports that he had agreed to halve the tariffs on billions of Chinese imports.

An announcement from U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerGOP senator warns quick vote on new NAFTA would be 'huge mistake' Pelosi casts doubt on USMCA deal in 2019 Pelosi sounds hopeful on new NAFTA deal despite tensions with White House MORE specified that the U.S. would keep 25 percent tariffs on some $250 billion of Chinese imports, but drop the rate to roughly 7.5 percent tariffs on another $120 billion in imports.

The deal also scrapped a new round of 15 percent tariffs scheduled to go into effect on an additional $156 billion of imports starting Sunday.

At a press conference that began minutes before Trump's tweet, Chinese officials announced that an agreement had been reached on text for the nine-part deal, and said that tariffs would be phased out over time. 

But officials also said the specifics of the deal on agricultural purchases, a major sticking point for Trump, would be released at a later time. Chinese officials did say they would accept increased agricultural imports from the U.S.

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Trump administration officials later said that China had committed to purchasing between $40 and $50 billion in agricultural goods over the next two years.

White House economic adviser Larry KudlowLawrence (Larry) Alan KudlowMORE told reporters that he expected the agreement to be signed by Lighthizer and Chinese Vice Premier Liu He “in a few weeks."

“This is an enormous first step. It represents an opening of China,” Kudlow said, adding that the deal would go into effect “almost immediately.”

Stock markets, which soared Thursday as reports surfaced that a deal had been struck, remained relatively ambivalent about the announcement. The Dow Jones Industrial Average briefly jumped 130 points, but was down nearly 40 within an hour.

China said the two sides are working toward wrapping up legal reviews and arranging for an official signing.

The text of the agreement is expected to be made public once those final steps are taken.

Lighthizer said the U.S. won concessions from China in the fields of intellectual property, technology transfer, financial services and currency.

“President Trump has focused on concluding a Phase One agreement that achieves meaningful, fully-enforceable structural changes and begins rebalancing the U.S.-China trade relationship," he said.

A senior administration official later acknowledged that the “phase one” deal did not address issues related to data localization, cross-border data transfers, disciplines on state-owned-enterprises, and cyber intrusions and that the administration hoped to address them in discussions about a “phase two” agreement.

“There are important issues that we do expect to address moving forward,” the official said.

Earlier in the morning, Trump seemed to cast doubt on the deal, saying on Twitter that a Wall Street Journal article on the deal "is completely wrong, especially their statement on Tariffs. Fake News."

The deal could offer Trump a boost going into the 2020 election. Uncertainty over trade has been a major source of economic uncertainty, and by some accounts has completely countered the economic boost from Trump's signature tax cuts.

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The announcement also comes just days after Trump and congressional Democrats struck a deal to pass the United States-Canada-Mexico Agreement (USMCA), an update to the North American Free Trade Agreement (NAFTA).

As a candidate, Trump had promised to renegotiate NAFTA, which he called the worst trade deal in history.

The House is expected to pass the deal as soon as next week, while the Senate will wait until after it wraps up an impeachment trial for Trump.

– Morgan Chalfant contributed reporting

Updated: 3:43 p.m.