Published: Thu, December 06, 2018
Finance | By Kristine Clayton

US, China declare 90-day halt to new tariffs, White House says

US, China declare 90-day halt to new tariffs, White House says

If no broader deal is reached within 90 days, the USA said it would hike tariffs on $200bn of Chinese goods from 10 to 25 percent.

The 90-day truce in the escalating trade war between the US 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.

Trump made the announcement in a tweet late Sunday in the United States, saying Beijing will "reduce and remove" the tariffs, which now stand at 40%.

According to China's statement, both sides have agreed to stop imposing tariffs on goods imported from each other, which means that tariffs on Chinese goods worth $200 billion will not be raised from current 10 percent to 25 percent at the beginning of next year.

But then Trump and Chinese President Xi Jinping met face to face at the G20 summit in Argentina this weekend.

Trump tweeted that China had agreed to "reduce and remove" tariffs of 40 percent on cars, though Beijing has yet to confirm the move.

He said for the first time there was "a clear path" to reduce the USA trade deficit with China to zero. "I don't agree with that", he said.

Beijing had reduced auto import duties from 25 percent to 15 percent in July. In September, the last month that was recorded, the monthly us trade deficit with China was $40 billion. Meanwhile, the Xinhua news agency also reported, citing the Chinese Foreign Ministry, that the two countries had agreed to expedite talks toward eliminating all additional tariffs.

Treasury Secretary Steve Mnuchin said on Monday there was a clear shift in tone at Buenos Aires from past discussions with Chinese officials, as Xi offered a clear commitment to open China's markets to USA companies.

The markets' initial positive reaction obscures the fact that a firm agreement appears far off.

"We all realise that we are indirectly influenced by the fact that Sino-American economic relations are not running as smoothly as a world order needs", she said. Jinping has also pledged to immediately begin negotiations on structural changes with respect to forced technology transfer and intellectual property protection.

China reaffirmed that the agreement held "great significance".

"Both sides believe that the principled agreement reached between the two presidents has effectively prevented the further expansion of economic frictions between the two countries", he said.

China's Shanghai Composite and Hong Kong's Hang Seng index went up by over 2.5 percent in early trading, and in Japan, the Nikkei 225 increased by over 1 percent.

After being spooked by the conflict, investors returned to buying following the long-awaited meeting between the two presidents. China recognizes that the rest of the world does things differently [when it comes to reform and opening up].

Gen. Jack Keane said Monday on "The Story" that he's in favor of the truce agreed upon between the USA and China, but "it remains to be seen" what results it will yield.

The nationalist Global Times tabloid called it a "momentous step forward" that brings "huge potential for fair trade".

Under the agreement, Trump will hold off on his vow to increase US tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent on January 1. "China, right now, has major trade barriers-they're major tariffs-and also major non-tariff barriers, which are brutal".

But in an editorial, the official China Daily warned that while the new "consensus" was a welcome development and gave both sides "breathing space" to resolve their differences, there was no "magic wand" that would allow the grievances to disappear immediately.

"The relationship is very special", he said.

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