Trump and Xi agreement buys time in trade war

Thursday, 06 Dec, 2018

President Donald Trump, right, has dinner with China's President Xi Jinping, left and members of their delegation at the end of the G20 Leaders' Summit in Buenos Aires, Argentina, Dec. 01, 2018.

Under the agreement, Trump is shelving a plan to raise tariffs on $200 billion worth of Chinese imports from 10 percent to 25 percent from the start of next year - but the hike will kick in if negotiators fail to reach a final deal within 90 days.

Late Sunday, Trump tweeted that "China has agreed to reduce and remove tariffs on cars coming into China from the U.S. now the tariff is 40 percent".

Beyond the staying of further tariff implementation, the second most important outcome of the G20 encounter is that we're now entering another period of protracted uncertainty. China also will make fentanyl, a deadly synthetic opioid, a controlled substance, the White House said.

Asian shares were mostly lower Tuesday as traders questioned whether a 90-day truce in a tariff battle will allow the USA and China to resolve issues ranging from technology development to trade. 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.

Kudlow added that Chinese negotiators told the United States they would move "immediately" to remove tariff and non-tariff barriers without offering specifics on what sectors would be affected, but said he believed it would be tied to automobiles.

"I believe it's hard to complete all the related tasks and resolve all the issues clearly within 90 days".

China-made e-bikes and e-bike motors will remain subject to the 25 percent tariff imposed in August.

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At the dinner, Trump said his ties to Xi were "a very primary reason" for considering a deal possible.

Wang said the two presidents agreed to keep in close touch with each other through visits, meetings, phone calls and correspondents to continue providing guidance for the bilateral ties. "I don't agree with that", he said. Trump and the leaders of those countries signed an updated trade deal, the U.S. -Mexico-Canada Agreement, or USMCA, at the G-20.

The not-so-subtle disparities between the USA and Chinese official statements highlight how much a gap needs to closed in the three-month trade war time-out. We'll know more when the White House sends out an official statement.

American Apparel & Footwear Association President and CEO Rick Helfenbein said the AAFA is "encouraged" by the news.

'This was an wonderful and productive meeting with unlimited possibilities for both the United States and China. "Farmers, I LOVE YOU!" he said. They have all seen exports to China stall amid rising trade tension.

While the Trump administration emphasized trade issues such as a 90-day moratorium on raising tariffs and Xi's concession to buy "very substantial" amounts of USA goods, China focused on diplomacy, regional issues and an agreement to try to quickly resolve their differences.

Beijing will no doubt attempt to make good on its pledge to increase purchases of USA goods, turning probably to soybeans and potentially energy.

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