US President Donald Trump has threatened to terminate the Phase One trade deal with China if the country fails to fulfill its promise of buying USD 200 billion more of American goods and services.
During a virtual town hall from the Lincoln Memorial in Washington on Sunday (local time), Trump said that Chinese President Xi Jinping had only agreed to the deal because of the Washington-imposed tariffs which “at a minimum are the greatest negotiating tool that we have ever devised that we never use”, South China Morning Post reported.
“We are going to have to see what is going on (with the purchases) because of what happened,” said Trump.
“They took advantage of our country. Now they have to buy and if they do not buy, we will terminate the deal. Very simple. China doesn’t want to see me elected,” he added.
The Phase 1 deal has ended tariffs of around USD 155 billion worth of Chinese imports that were set to take effect at the end of 2019 and halved tariffs to 7.5 per cent on another USD 120 billion in goods. But it kept in place the 25 per cent import taxes on USD 250 billion worth of Chinese products.
In exchange, China pledged to buy, over two years, at least USD 200 billion more of American goods and services than it did in 2017, including about USD 40 billion in agricultural goods.
Many have speculated that China’s ability to make the purchases has been significantly damaged by the coronavirus pandemic, which led to the country’s first economic contraction since 1987, after months of lockdown to contain its spread.
Meanwhile, Trump once again addressed the question about the origin of the coronavirus, which has so far infected more than 3.5 million people and killed over 245,000 around the world.
“Personally I think (China) made a horrible mistake. They tried to cover it up. It is really like (they were) trying to put out a fire. They could not put out the fire,” the US President said.
Meanwhile, the US is formulating a raft of measures to hold China responsible for the pandemic that includes sanctions, cancelling US debt obligations and drawing up new trade policies.