Trade truce with China means big changes in Beijing policy

Trade truce with China means big changes in Beijing policy

The US trade deficit with China was United States dollars 335 billion past year and many manufacturers rely on inputs from the world's number two economy, so eliminating the deficit would be an extraordinary goal.

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.

"My meeting in Argentina with President Xi of China was an extraordinary one", Trump said on Twitter.

It was a similar story for European bourses while, earlier, China's main market index had risen by 2.7% and the Nikkei in Tokyo was 1%.

The tweet indicates Beijing made a concession to Washington to try to resolve their trade friction during talks between Trump and Chinese President Xi Jinping on the fringes of the Group of 20 summit in Buenos Aires over the weekend.

William Zarit, chairman of the American Chamber of Commerce in China, said the outcome of the meeting was "as good as we could have expected" considering the complex issues involved. In doing so, they cited the trade conflict as well as political uncertainty.

Without progress, Trump will face renewed pressure from hardliners to resume escalating the tariff fight.

"President Trump is right to have zeroed in on China's unfair trade practices, but a trade war with China isn't good for the world's economy over the long term, and it's not good for the US economy either", Delaware Sen.

Washington agreed to delay a tariff increase on more than 200-billion US dollars' worth of Chinese imports to 25-percent from 10-percent originally planned to go into effect on January 1st, . while China agreed to resume purchases of USA farm and energy commodities.

"If China cancels tariffs on high-end imported cars, that should benefit dealerships as the prices will be lower", said Angus Chan, a Shanghai-based analyst with Bocom International.

Xi Jinping
Xi Jinping

It is linked to "intense geopolitical competition" with Washington.

Ultimately, a meaningful, lasting deal is unlikely in the 90-day window.

However, questions about whether Trump's real motive was to avoid embarrassment about a deepening probe back home over improper links to Russian Federation would not die down, leaving Trump hoping for good news from the China meet.

Trump also said he would shortly be providing formal notice to Congress that he will terminate the North American Free Trade Agreement, giving lawmakers six months to approve the replacement he signed Friday.

The White House and US Trade Representative's Office did not immediately respond to a request for comment late on Sunday.

In addition, the USA said China agreed to "purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products from the United States". The world, Xi said, has witnessed a lot of changes since then. But they have been overshadowed by the tariff battle.

Trump has imposed import taxes on $250 billion in Chinese products - 25 percent on $50 billion worth and 10 percent on the other $200 billion.

Trump has said he might consider raising tariffs on all remaining Chinese imports, or about $267 billion of goods.

"The consensus reached by the leaders of our two countries is to halt the imposition of new tariffs and at the same time the two sides' leaders instructed the economics teams of both sides to intensify talks towards the removal of all tariffs that have been imposed", Geng told a daily news briefing.

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