Donald Trump, the US president, has agreed to hold off on imposing higher tariffs on Chinese imports next year, after reaching a deal with Xi Jinping, China’s president, to slow the trade war afflicting both countries and rattling financial markets.
The news will see a strong start to trading on markets this week in Australia and Asia today. As far as Australia is concerned, it is good news because it means the threat of a full-blown trade war involving our biggest export market have eased.
The temporary ceasefire was reached after a working dinner involving the two presidents and their top advisers in Argentina, following the end of the G20 world leaders summit on Saturday.
Under the plan, the two sides will spend the next 90 days discussing forced technology transfer, intellectual property protection, non-tariff barriers, cyber-intrusions and cyber-theft, services and agriculture.
Should the talks fail, the White House said, the tariffs on the $US200 billion of goods would increase to 25% from the current 10%. The tariffs are set to increase to that level on January 1 next year. This deal pushes that deadline out to March 1.
“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries,” it said.
“China has agreed to start purchasing agricultural product from our farmers immediately,” The White House said.
In addition, the White House claimed Chinese President Xi Jinping said he would consider again the previously unapproved merger between chipmakers. Qualcomm Inc and NXP Semiconductors NV should the deal be presented. The deal fell apart earlier this year after Beijing failed to approve the merger.
Describing the talks between Trump and Xi as “friendly and candid,” Wang Yi, China’s foreign minister, said at a briefing that the two leaders reached “important consensus” that could help improve the overall bilateral relationship.
The Trump administration also agreed not to slap any additional tariffs on Chinese products, Wang said, and both sides will hold talks intended to eliminate all existing extra tariffs.
The dinner and agreement came after the G20 ended in something of a truce itself in Buenos Aires.
In a joint statement at the end of the meeting, the leaders said the multilateral trading system had made a “contribution” to growth, development, and innovation but there was “room for improvement”.
They promised to overhaul the World Trade Organization, the Geneva-based body which has been heavily criticised by the Trump administration, with progress to be reviewed by the middle of next year.
The Trump administration was able to remove a pledge found in previous G20 statements to fight “protectionism”, and its call for big changes at the WTO was heeded.
The outcome of the G20 meeting is in stark contrast to that from last month’s APEC summit in Papua New Guinea which ended without an agreement for the first time in that gathering’s 29-year history.
