The “Phase One” interim trade agreement between the US and China, in its original version, was conceived as a limited deal that would allow the national leaders to claim victory but at the same time soothe concerns of fragile financial markets.

However, the deal has chances to turn into something bigger as Trump may consider the option to cancel all existing tariffs. Beijing considers this an indispensable condition for the deal. In return, Chinese side will be ready to offer increased purchases of US agricultural products, facilitating access to the domestic financial market for foreign investors and promises to deal with the problems of theft and forced transfer of intellectual property. But this is not enough for the US which risks to lose oversight without proper enforcement mechanism.

According to Reuters, two sources familiar with the negotiations said that, according to Trump, such substantial assignments should be "exchanged" for more serious concessions. Trump still intends to conclude a more comprehensive deal than the one that was announced in October, which further complicates the search for a trade-off.

According to Derek Scissors, the scholar at the American Enterprise Institute who advises White House administration officials, the political background is ascendant in Trump's motive to continue the trade war. If the decision to abolish tariffs increases his chances of re-election, he will take it.

But the opposite is more likely, though: several key states could back Trump thanks to his aggressive rhetoric about the US rip-off in trade, so the "tough stance on China" will likely to be key foothold of constituency support in such states as Ohio, Michigan and Pennsylvania before the next election.

Trump's goal in the interim deal is a mix of resolving a pressing domestic issue while retaining a lever over China - i.e. large purchases of agricultural products and the preservation of a significant part of tariffs as a mechanism for enforcing compliance with agreements and leverage for solving intellectual property issues. However, Beijing insists that the purchase of agricultural products will be regulated by the market, not administrative measures. Trump’s advertised purchases of agricultural products in the amount of $ 40-50 billion a year are likely to require dropping all tariffs, which does not look like a good bargain for the United States, since the main claims remain unresolved.

On Tuesday, Trump again rattled the market saying that he would continue to raise tariffs if China did not agree to US demands. The timing of the first phase of the agreement, which was due in October after negotiations between Trump and Chinese Deputy Prime Minister Liu He, is likely to be moved to next year.

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