US President Donald Trump and Chinese President Xi Jinping (習近平) on Saturday agreed 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 Jan. 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.
Photo: AP
The two leaders, who were in Buenos Aires for the G20 summit, called it “a highly successful meeting,” the White House 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,” Chinese Minister of Foreign Affairs Wang Yi (王毅) said.
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 — hit by the US Democrats’ congressional win in last month’s mid-term elections — can ease damage to agricultural US states that export to China, particularly the key soybean crop.
“This was a rare opportunity for China because [the mid-terms] made Trump a lame president,” Beijing-based political consultant Hua Po (華頗) said. “So at this time it was acceptable for China to maintain some bottom lines while making some major concessions.”
However, Brad Setser, a former US Department of the Treasury official and now senior fellow at the Council on Foreign Relations in Washington, told Bloomberg 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.
About US$50 billion worth of Chinese imports already face 25 percent tariffs, while the 10 percent tariffs — which target a massive US$200 billion in goods — are to remain in effect.
China has targeted US$110 billion worth of US imports for tariffs.
If there is any further retaliation, Trump has warned that he would slap punitive duties on the remaining US$267 billion in Chinese goods coming to the US.
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 does not 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.
The meeting — featuring a menu of sirloin steak, caramel rolled pancakes and Argentine wine — went on longer than scheduled.
The White House said after the dinner that Trump, Xi and North Korean leader Kim Jong-un would strive “to see a nuclear free Korean Peninsula.”
Trump and Xi “agreed that great progress has been made with respect to North Korea,” it said in a statement.
Trump told reporters aboard Air Force One heading home from Buenos Aires that he was likely to meet Kim next month or in February.
“We’re getting along very well. We have a good relationship,” Trump said.
Additional reporting by Reuters
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