On January 15, President Trump signed a much-anticipated “Phase One” trade agreement with China—the culmination of more than two years of escalating trade tensions and negotiations. In the discussion that follows, Stanford Law Professor Alan O. Sykes, an expert in international trade law, explains key aspects of the new agreement that covers IP, agriculture, energy, and more.

The trade talks between the U.S. and China were at times quite tense. Do you think the deal is a “win-win,” with benefits for both countries?

The answer may depend on your baseline. It is certainly an improvement over a steadily escalating trade war. Is it an improvement over the status quo ante prior to the trade war? I will leave any quantitative assessment to the empirical economists, but the fact that stiff tariffs remain in place on both sides surely detracts from any benefits of the agreement. According to the Peterson Institute for International Economics, average tariffs on U.S. imports from China were 3.1% in January 2018 and will be approximately 19.3% after the Phase One Agreement goes into effect in February. China’s average tariffs on U.S. imports have risen from 8.0% in January 2018 to 20.9% today and will remain at this level under the Phase One Agreement.

As to the long-term picture, one can only speculate—will we reach a comprehensive agreement that addresses U.S. concerns about China to the satisfaction of both sides and rolls tariffs back to their prior levels, or are we looking at many more years of higher tariffs and business uncertainty? My crystal ball is in the shop.

So trade tariffs imposed by both China and the U.S. over the last two years of the escalating trade war will not be rolled back?

The United States will reduce some of its tariff increases in return for Chinese concessions in “phase one” but retains the bulk of the tariffs as “negotiating leverage” for the future. And China retains its retaliatory tariffs. Both sides are deferring any further rollbacks until the “phase two” negotiations.