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US, China agree to trade war ceasefire, more talks
BUENOS AIRES, Dec 3, 2018 (BSS/AFP) – US President Donald Trump and
China’s Xi Jinping agreed Saturday to suspend any new tariffs in the
escalating trade war between the world’s two largest economies, even if huge
existing duties will remain in place.
Following more than two hours of dinner talks between the two leaders, the
White House said an increase of tariffs from 10 to 25 percent due to kick in
on January 1 would now be put on hold, providing room for intense
negotiations.
The agreement, hashed out over steak in the Argentine capital Buenos
Aires, lowers the temperature in a conflict that has spooked world markets.
The two leaders, who were in Buenos Aires for a summit of the G20
countries, called it “a highly successful meeting,” a White House statement
said.
“The principal agreement has effectively prevented further expansion of
economic friction between the two countries and has opened up new space for
win-win cooperation,” said Chinese Foreign Minister Wang Yi.
“It’s an incredible deal,” Trump told reporters aboard Air Force One on
the flight home to Washington, adding it would have an “incredibly positive
impact” on American farmers.
– Partial truce –
Under the agreement, Trump is shelving a plan to raise existing tariffs of
10 percent to 25 percent from the start of next year.
Xi avoids further immediate pressure on China’s slowing economy, while
Trump — scarred by last month’s midterm elections that saw the Democrats
regain control of the House of Representatives — can ease damage to
agricultural US states that export to China, particularly soybean producers.
“China will be buying massive amounts of product from us,” Trump said
after the talks.
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For Beijing-based political consultant Hua Po, “this was a rare
opportunity for China” to capitalize on what they saw as Trump’s compromised
position after the midterms.
“At this time, it was acceptable for China to maintain some bottom lines
while making some major concessions.”
But Brad Setser, a former Treasury official and now senior fellow at the
Council on Foreign Relations in Washington, told Bloomberg that much remains
to be done.
“The hard part is finding the basis for a real deal that settles the
broader issues rather than agreeing on a pause,” Setser said.
The truce is only partial.
Some $50 billion worth of Chinese imports already face 25 percent tariffs,
while the 10 percent tariffs — which target a massive $200 billion in goods
— will also remain in effect.
Meanwhile, China has targeted $110 billion worth of US imports for
tariffs.
If there is any further retaliation, Trump has warned, he will slap
punitive duties on the remaining $267 billion in Chinese goods coming to the
United States.
And Saturday’s truce also contained an ultimatum.
The White House made clear that the 10 percent tariffs would still leap up
to 25 percent if China doesn’t meet US demands in 90 days.
These include China stopping a host of trade barriers, intellectual
property theft and other actions that Washington say make fair trade
impossible.
Tough negotiations lie ahead, but Trump was upbeat.
“This was an amazing and productive meeting with unlimited possibilities
for both the United States and China,” he said in a statement.
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– Steaks and high stakes –
The meeting — featuring a menu of sirloin steak, caramel rolled pancakes
and Argentine wine — went on longer than scheduled.
And while it may have been tacked on to the end of two days of G20
diplomacy, it was in many ways the main event of the weekend.
German Chancellor Angela Merkel, who was also attending the G20, spoke for
many when she urged progress.
“We all realize 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.
– Personal chemistry factor –
On the US side at the dinner, Trump was accompanied by advisers such as
Larry Kudlow and Treasury Secretary Steven Mnuchin, who are widely seen as
wanting a deal.
But hawkish advisers like Peter Navarro and US Trade Representative Robert
Lighthizer were also present.
Trump, as often in his diplomatic dealings, appears to consider his
personal chemistry with Xi the most important factor in the success of the
negotiations.
He has prided himself on building a good relationship with the Chinese
leader, even though he acknowledges it may have trouble surviving the growing
crisis.
At the dinner, Trump said his ties to Xi were “a very primary reason” for
considering a deal possible.
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