US and China sign Phase One trade deal

16th January, 2020 by Nicola Carruthers

The Distilled Spirits Council of the US is urging China and the US to “continue negotiations” for a deal that removes tariffs on US spirits after the Phase One trade agreement between the two nations was signed yesterday (15 January).

China has agreed to suspend tariff increases on US goods, including spirits

On Friday 23 August 2019, China’s Finance Ministry announced its intention to implement additional tariffs worth US$75 billion on 5,078 items, including American whiskey.

The move was in response to US president Donald Trump’s decision to slap a 10% tariff on US$300bn worth of goods from China in a trade war that has been rumbling on for more than a year.

China planned to implement tariffs in two phases, on 1 September and 15 December. In the December round, an additional 5% tariff was due to come into force on American whiskey, which has already been subject to a 25% import tax hike.

On 13 December 2019, the US and China agreed to sign the Phase One trade agreement. It was signed during a ceremony in Washington yesterday (15 January).

As part of the agreement, China has agreed to suspend tariff increases on US goods, including spirits, which were due to come into force on 15 December.

“The Phase One trade agreement between China and the United States, which led to China’s suspension of additional tariff increases on certain US spirits products, is a sign of real progress and a welcomed first step,” the Distilled Spirits Council said.

“We appreciate the Trump administration’s efforts to address long-standing trade barriers with China.

“We commend China and the Trump administration for working to de-escalate the trade dispute and urge both governments to continue negotiations towards a Phase Two deal that removes the retaliatory tariffs that currently remain in place on US spirits products, including American whiskey, rum, gin, vodka, liqueurs and cordials and brandy.

Before the trade spat, US spirits exports to China increased 128% over the past decade. The Distilled Spirits Council said the tariffs “brought this phenomenal growth to a halt” as American spirits exports to China fell 8% between January and November 2019, compared to the same period in 2018.

In December, the US said it was considering increasing tariffs on EU goods, including Scotch whisky, due to the continued spat over aircraft subsidies.

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