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Fortunately, Trump is keeping the 25% tariffs on $250 billion of Chinese goods entirely in place while just reducing the 15% rate on $115 billion to 7.5%. By keeping these tariffs in place until and unless there is a Phase Two deal, which is at least a year away, China has every incentive to comply with the deal. Put simply, tariffs worked.

The potential genius of this agreement is Trump can leverage this new status quo to get an even better Phase Two deal. Under Phase One, China will buy more American products than ever before while we keep over 90% of our tariffs in place (this statement alone shows how one-sided the deal was).

...By raising the cost of production, tariffs incentivize companies to move their supply chains. However, for companies to go through the process of investing elsewhere and moving production they have to believe tariffs will be in place for a prolonged period of time; otherwise, they will try to wait out the tariffs.