China and the United States have agreed on the text of a "phase 1" economic and trade agreement based on the principle of "equality and mutual respect."

As part of the interim deal, the Trump administration has dropped its plan to impose new tariffs on $160 billion of Chinese imports beginning Sunday.

The administration is also reducing its existing import taxes on about $112 billion in Chinese goods -- including smart phones, computers and other consumer electronics -- from 15% to 7.5%.

The United States has also agreed to modify its Section 301 tariff actions in "a significant way."

In return, China agreed to buy $32 billion in U.S. farm products over two years. Beijing has also committed to ending a practice of pressuring companies to hand over their technology as a condition of gaining access to the Chinese market.

China had also agreed to lift non tariff barriers to the Chinese market for such products as beef, poultry, seafood, pet food and animal feed.

The U.S. expects a $200 billion boost in exports over two years as a result of the deal.

The deal will likely be signed the first week in January and take effect 30 days later.

The Phase 1 text includes nine chapters: the preface, intellectual property rights, technology transfer, food and agricultural products, financial services, exchange rate and transparency, trade expansion, bilateral assessment and dispute settlement, and the final terms.

According to the Office of the U.S. Trade Representative, the Intellectual Property (IP) chapter "addresses numerous long standing concerns in the areas of trade secrets, pharmaceutical-related intellectual property, geographical indications, trademarks, and enforcement against pirated and counterfeit goods."

The Technology Transfer chapter "sets out binding and enforceable obligations to address several of the "unfair" technology transfer practices of China that were identified in USTR’s Section 301 investigation." China has agreed to end its practice of "forcing or pressuring foreign companies to transfer their technology to Chinese companies as a condition for obtaining market access, administrative approvals, or receiving advantages from the government."

China also commits "to provide transparency, fairness, and due process in administrative proceedings and to have technology transfer and licensing take place on market terms." Separately, China further commits "to refrain from directing or supporting outbound investments aimed at acquiring foreign technology pursuant to industrial plans that create distortion."

However, the agreement leaves some major issues unresolved, notably U.S. complaints that China unfairly subsidizes its own companies to give them an edge in world markets.

President Donald Trump said that work on a follow-up Phase 2 agreement would begin immediately.

Chinese officials said at a briefing in Beijing that if the administration reduces its tariffs, China will lower its trade penalties on American goods and also scrap plans for new tariffs Sunday.

Friday's announcement means that the U.S. will continue to impose 25% import taxes on $250 billion in Chinese goods and will halve the tariffs on another $112 billion to 7.5%. That step would have extended the tariffs to just about everything China sells the United States and would have hit consumer items such as toys and smartphones that have so far largely been spared.

The Trump Administration has extended special licenses that allow U.S. companies to provide goods and services to Huawei. But uncertainty over Huawei’s long-term trade status has prompted some chipmakers to factor Huawei out of their financial projections.

Chipmakers are worried about their design status within Huawei’s wide-ranging 5G portfolio. The company is reportedly producing equipment that does not contain some U.S. technology. Industry experts fear damage has already been done to the high-tech supply chain.