The US and China have reached a “very substantial phase one” deal, US President Donald Trump has declared. Tariffs due to take effect on Tuesday have been canceled, and markets responded with elation.

Phase one of the deal includes intellectual property, financial services, and agricultural purchases, Trump announced on Friday during a meeting with Chinese vice premier Liu He in the Oval Office, adding that the actual agreement may take up to five weeks to write. Planned tariff increases from 25 to 30 percent on some $250 billion in Chinese goods due to take effect next week have been scrapped.

China has agreed to purchase $40-50 billion in agricultural goods, and the countries have reached an agreement on currency issues, Trump declared. Regarding transfer of technology – a particularly sore spot for Washington, which has repeatedly accused Beijing of stealing its intellectual property – the President said the parties had “made progress,” but that most of those issues would be worked out in phase two.

Pres says he's "very happy" with the Phase 1 deal. He tells Chinese Vice Premier Liu He, seated across the Resolute Desk from him, "you're a very tough negotiator." Trump also said he watched China's celebration of its 70th anniversary and called it "amazing to watch." pic.twitter.com/nWFqEKlFeW — Mark Knoller (@markknoller) October 11, 2019

Trump praised the Chinese team as “very tough negotiators,” promising the deal would be “great for both countries.” The talks for phase two will begin after the signing of phase one, and there may be a phase three as well.

The triumphant announcement followed two days of negotiations in Washington and appears to signal a truce in almost two years long trade war between the two countries. Markets responded favorably to the news – the Dow was up 319 points by the close of markets and continued to rise afterwards, while the S&P 500 was up 32 points and the Nasdaq gained 106 points.

“There was a lot of friction between the US and China. And now it’s a lovefest,” Trump said, calling the deal “a great thing for the world.”

Treasury Secretary Steve Mnuchin confirmed that the US and China also agreed on transparency in foreign exchange and “almost a complete agreement on financial services.” Washington will evaluate whether to cancel the designation of China as a currency manipulator, he stated.

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Trump promised to “have a look” at the trade blacklist in order to determine which companies would be on it. The most prominent member of the list, of course, is Huawei, the Chinese telecom Trump’s government has accused of espionage on behalf of the Chinese government, but Chinese energy firms and technology companies are also on the list. Companies on the “entity list” cannot do business with US companies unless they obtain a rare license that must be granted by the government

The two parties also discussed the ongoing protests in Hong Kong, with Trump reporting that his Chinese counterpart believes “things have toned down there” and that “he thinks that’s going to take care of itself.”

Asked by a reporter whether he had discussed former vice president Joe Biden with the Chinese, Trump said he had not and that “China can do whatever it wants with Biden.” He did, however, ask “where is Hunter?” in reference to Biden's son – a slogan he told Thursday night’s rally in Minnesota he wanted printed on t-shirts. Trump has accused both Bidens of corruption regarding suspiciously lucrative dealings in China and Ukraine.

Later on Friday, Chinese President Xi Jinping sent an affable message to President Trump, affirming that the talks were “making progress,” and that Beijing had “accelerated purchases of American agricultural products,” including pork and soy beans.

“A healthy and steady China-US relationship serves the interest of our two countries and the world at large,” Xi wrote. “Let us work together to manage differences on the basis of mutual respect … so as to bring our relations forward along the right track.”

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