U.S. will phase out tariffs on China as part of new trade deal

U.S. President Donald Trump and Chinese officials said Friday that they have agreed to the first phase of a trade deal that included cutting U.S. tariffs on Chinese goods.

Trump said on Twitter that China and the U.S have agreed to a very large part of what he called a "Phase One"deal.

The U.S. will modify its tariffs on Chinese goods in a "significant way," while China would buy substantially more U.S. goods and services, the U.S. Trade Representative's (USTR) office said on Friday.

Under the agreement, Washington will maintain 25 per centtariffs on about $250 billion (all figures US)of Chinese imports, and reduce to around 7.5 per centtariffs imposed on $120 billion of other Chinese imports, USTR said in a statement.

China has also agreed to suspend retaliatory tariffs,targeting goods ranging from corn and wheat to U.S.-made vehicles and auto parts, that were due to take effect Sunday.

The trade agreement required structural reforms to China's economic and trade regime in areas of intellectual property, technology transfer, agriculture, financial services, currency and foreign exchange. The deal also includes a "strong dispute resolution system,"USTR said. It offered no further details on any of the reforms or a timeline for their implementation.

The deal will provide more protection for foreign companies in China, and Chinese companies in the United States, Chinese officials said.

The two countries have achieved major progress in their trade negotiations, agreeingon the text of that part of the deal, Beijing officials said.

Beijing has agreed to buy $32 billion in additional agricultural goods over the next two years, U.S. officials said, from a baseline of $24 billion purchased in 2017, before the trade war started.

The U.S. has been pushing for China to commit to buy $50 billion US in agricultural products in 2020, a figure that Chinese officials have previously balked at.

China has not been a major buyer of U.S. corn, wheat or rice in the past though in recent years it has been the topthirdor fourthbuyer of one particular variety of wheat, U.S. spring wheat used for blending. China was a top five buyer of U.S. corn from 2011 to 2014 but has not been a major buyer since.

Some U.S. business groups hailed the deal as an end to uncertainty that's slowed global growth; critics questioned whether the trade war had been worth the job losses and drop in sales.

The Business Roundtable, a group of chief executives of the largest U.S. companies, said "This de-escalation in trade tensions is a positive step toward resolving important trade and investment issues between our two nations."

Chris Murphy, a Democratic senator fromConnecticut, called it a "total capitulation," saying China had made "zero hard commitments to structural reform."

U.S. markets have gyrated on rumours and leaks about the trade deal in recent months, but were muted on Friday on news it had been agreed.