Trump and Xi agreement buys time in trade war
- Author: Darren Santiago Dec 06, 2018,
Dec 06, 2018, 0:33
Mr. Trump's tweet on the apparent deal on auto tariffs came a day after the White House said he and Chinese President Xi Jinping had agreed to a truce in the ongoing trade war, and Mr. Trump agreed not to raise USA tariffs on Chinese goods any further for several months.
Before the meeting with Xi, Trump had set a January 1 deadline for increasing tariffs on $200 billion of Chinese goods from 10% to 25%.
The White House said China would buy a not-yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products from the US.
President Trump stated: "This was an fantastic and productive meeting with unlimited possibilities for both the United States and China".
Trump's surprise announcement comes a day after he and Chinese President Xi Jinping agreed to suspend any new tariffs and give negotiators 90 days to strike a deal. I think we'd like to.
"The good news is that this truce should be seen as Washington recognizing the potential damage on the United States economy if tariffs escalate further", said Tai Hui, chief market strategist for Asia Pacific at JPMorgan Asset Management.
If the two sides can not reach agreement over these matters within the next 90 days, the United States will raise tariffs.
Trump agreed to postpone the raising of tariffs on goods from China worth USA $200 billion from 10 percent to 25 percent, which had been scheduled for January 1.
The two-and-a-half-hour dinner shared by Xi Jinping and Donald Trump in Argentina, where they repeatedly emphasized their great friendship, has ended with an apparent "trade truce" but no immediate tangible results or declaration.
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Kudlow told reporters at the White House that Washington would like to see progress quickly on structural issues, including intellectual property theft and technology transfers. Most U.S. supply of the drug is manufactured in China.
China has agreed to start purchasing agricultural products from our farmers immediately.
Beyond the trade deficit that occupies much of Trump's attention, the USA has a long list of grievances it wants to address with Beijing in any upcoming negotiations.
USA markets soared on news of the detente with the Dow rising more than 400 points in Monday morning trading.
According to the U.S. statement, part of the deal to halt stricter tariffs was that the Chinese side would make unspecified but "very substantial" purchases of United States goods immediately.
U.S. Trade Representative Robert Lighthizer said last week he was examining all available tools to raise U.S. tariffs on Chinese vehicles to the 40 percent that China was charging on U.S. -produced vehicles.
"Beyond the political spin, the meeting between Trump and Xi can be considered a success in that the threatened escalation of trade tensions has been pushed back three months and the two parties are once again communicating", Greg Daco of Oxford Economics said.
Mr Trump has been willing to declare victory with only modest concessions in the past, pointing to new trade deals with South Korea, Canada and Mexico, he added.
It's unclear whether the tariffs on United States cars will be eliminated entirely or just reduced, Le said, adding that there's no information on the time frame for the changes or which types of vehicles would be affected.