US, China Agree to Delay Consideration of New Tariffs
President Donald Trump and Chinese President Xi Jinping agreed to keep their trade war from escalating with a promise to halt the imposition of new tariffs for 90 days as the world鈥檚 two largest economies negotiate a lasting agreement.
The truce between the U.S. and China emerged after a highly anticipated dinner Dec. 1 between Trump and Xi on the sidelines of the Group of 20 summit in Argentina. The leaders agreed to pause the introduction of new tariffs and intensify their trade talks, Chinese Foreign Minister Wang Yi told reporters hours later in Buenos Aires.
鈥淏oth sides believe that the principled agreement reached between the two presidents has effectively prevented the further expansion of economic frictions between the two countries,鈥 he said.
Chinese President Xi Jinping by Erica Canepa/Bloomberg News
The White House called the meeting 鈥渉ighly successful,鈥 saying the U.S. will leave existing tariffs on $200 billion of Chinese goods at 10% and refrain from raising that rate to 25% as planned Jan. 1. In exchange, the U.S. wants an immediate start to talks on Trump鈥檚 biggest complaints about Chinese trade practices: intellectual property theft, non-tariff barriers and forced technology transfer.
After 90 days, if there鈥檚 no progress on structural reform, the U.S. will raise those tariffs to 25%, White House Press Secretary Sarah Huckabee Sanders said in a statement. China also agreed to boost its purchases of agricultural and industrial goods to reduce its trade imbalance with the U.S., she said.
鈥淚t鈥檚 an incredible deal. It goes down, certainly 鈥 if it happens, it goes down as one of the largest deals ever made,鈥 Trump told reporters aboard Air Force One as he returned from Argentina. 鈥淐hina right now has major trade barriers 鈥 they鈥檙e major tariffs 鈥 and also major non-tariff barriers, which are brutal. China will be getting rid of many of them.鈥
Investors have been eager for signs of a progress toward keeping an already costly trade dispute from spiraling into a new and broader cold war. White House economic adviser Larry Kudlow said that the meeting went 鈥渧ery well鈥 in a brief comment to reporters as the Trump delegation left Buenos Aires for Washington.
....However, out of respect for the Bush Family and former President George H.W. Bush we will wait until after the funeral to have a press conference. 鈥 Donald J. Trump (@realDonaldTrump)
鈥淭his is a strongly market positive result for the short term, since over the past few days markets have been nursing hopes that a tariffs pause of this kind would happen,鈥 Evercore ISI head of political analysis Terry Haines wrote in a note. 鈥淏ut it is not a ceasefire as some already are touting.鈥
The outcome gives both sides enough to boast of a win without resolving the fundamental differences between them. China gets a delay on additional tariffs, while the U.S. gets greater purchases of agriculture goods while retaining leverage to push for more structural changes to the economy.
鈥淣either side got their maximum demands and it鈥檚 not the first time in U.S.-China relations that both sides claim victory,鈥 said Michael Pillsbury, a senior fellow at the Hudson Institute and a defense official under presidents including Ronald Reagan and George W. Bush. 鈥淏oth sides avoided the worst-case scenario.鈥
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