What Happened to Phase One Trade Deal?

The 'Economic and Trade Agreement Between the United States of America and the People's Republic of China: Phase One,' commonly known as the Phase One Trade Deal, was signed on January 15, 2020, and officially took effect on February 14, 2020. This agreement was a direct effort to de-escalate the escalating trade war initiated by the Trump administration in March 2018 through a Section 301 investigation into China's trade-distorting practices.

The deal's core components included China's commitment to significant structural reforms in areas such as intellectual property protection, technology transfer, agriculture, and financial services. Crucially, China also pledged to increase its purchases of U.S. goods and services by at least $200 billion over 2020 and 2021, above a 2017 baseline level. This included specific targets for agricultural products (an additional $32 billion), manufactured goods (an additional $80 billion), energy products (an additional $52 billion), and services (an additional $38 billion).

However, the implementation of these purchase commitments proved challenging. By the end of 2021, when the purchase commitments officially expired, China had only met approximately 58-60% of its total target for U.S. goods and services. For instance, in 2020, China missed its agricultural export target by over $6 billion. This significant shortfall was attributed to various factors, including the COVID-19 pandemic, supply chain disruptions, and China's efforts to diversify its suppliers. Critics also noted that the deal failed to address fundamental structural issues in the U.S.-China economic relationship, such as Chinese industrial subsidies.

Under the Biden administration, the U.S. continued to enforce the Phase One agreement. In October 2021, U.S. Trade Representative Katherine Tai announced the administration's intention to hold China accountable for its unfulfilled commitments. This led to further action in October 2025, when the Office of the U.S. Trade Representative (USTR) initiated a new Section 301 investigation into China's implementation of the Phase One deal. The USTR cited a shortfall of over $217 billion in China's aggregate purchases of U.S. goods and services and concerns regarding commitments on intellectual property, forced technology transfer, agriculture, and financial services. A public hearing for this investigation was held in December 2025.

As of February 2026, China's Ministry of Commerce responded to the USTR's investigation, asserting that China had earnestly fulfilled its obligations, overcoming adverse factors, and urged the U.S. to adopt an objective and rational view of its implementation. Looking ahead to September 2026, the trade relationship remains dynamic. The U.S. (under President Trump's second term) and China are actively negotiating reciprocal tariff reductions in key sectors like energy and agriculture. These discussions are seen as a positive signal ahead of an upcoming summit between Presidents Trump and Xi, potentially leading to an extension of a 'trade truce'. This indicates that while the original purchase targets of the Phase One deal are long past, the broader issues of trade balance, market access, and structural reforms that the deal sought to address continue to be central to U.S.-China economic engagement.