Trump Boasts of Relations with Xi, New Trade Deal with China

Mae Love
December 5, 2018

However, while the agreement provides breathing room for the US and China - and the global trading system as a whole - a final resolution to the US-China trade war remains far from certain.

"I think there is a specific understanding that we are now going to turn the agreement the two presidents had into a real agreement in the next 90 days", Mnuchin told reporters at the White House on Monday.

This year Trump imposed an import tax of 25 percent on $50 billion in Chinese products, then hit an additional $200 billion worth of goods with 10 percent tariffs.

With the ceasefire, the above tariffs will remain in place. There, all sides agree, the American president agreed to postpone an increase in tariffs on Chinese imports to 25% from 10%, which was scheduled to take effect Jan 1, in exchange for negotiations on broader economic disputes.

The Buenos Aires deal shows that both sides are aware that the tariffs could damage the global economy, it said.

This saw China retaliate with 10 percent tariffs on $60 billion (£46 billion) of U.S. imports. These tariffs also will not be implemented before March 1, 2019.

The two nations have been locked in the trade war since March when Trump imposed tariffs on metal imports from several countries, including U.S. longtime allies. It is also likely to be a good news for the stock markets in the United States and China.

The state-run China Daily struck a cautious tone.

In return, China is to purchase "very substantial" amounts of agricultural, energy, industrial and other products from the United States.

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In his Twitter posts on Tuesday, Trump said they might need an extension if the 90-day timeline didn't prove sufficient. Lighthizer, he said, "will be in charge of enforcement, timelines..."

"As far as we can tell, there are big discrepancies between both sides' statements", he said in a research note.

"President Xi also stated that he is open to approving the previously unapproved Qualcomm-NXP deal should it again be presented to him", the White House added.

Farmers sold $19.6 billion in products to China past year, according to the Farm Credit Administration Office of Regulatory Policy.

Trump last week ordered a separate review of China's 40 per cent tariff on auto imports from the US, 25 percentage points of which is the result of Chinese retaliation against Trump's own tariffs on imports from China. "China has agreed to start purchasing agricultural product from our farmers immediately".

Dealing with the central issue of China's forced technology transfers and subsidies "will require time, communication and good-will - a rare trifecta these days", he said.

The 90-day truce in the escalating trade war between the USA and China came during a dinner meeting between the two presidents following the G-20 summit of the world's biggest economies in Buenos Aires.

Nevertheless, businesses should continue to brace themselves for heightened tariffs. The US has demanded that China make dramatic changes to its economic and trade practices, including altering its industrial policy. "That appears to have been a key consideration for Trump, who became more open to a deal as United States stock markets weakened in October and November". We'll know more when the White House sends out an official statement.

Chinese news outlets also claimed both sides plan to eliminate all tariffs, which doesn't appear in the USA statement.

Moreover, the Chinese statement omits some of the USA language and tends to refer to its commitments in broader terms.

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