President Trump reaches truce with Chinese officials

President Trump reaches truce with Chinese officials

Troy Powers
December 6, 2018

The meal was sumptuous, the wine flowed and the words were reassuring.

After their hotly anticipated dinner meeting in Buenos Aires, Argentina, on the sidelines of this year's G20 leaders' summit, U.S. President Donald Trump and his Chinese counterpart Xi Jinping found the necessary ingredients for what amounts to a temporary truce.

Yet solving Washington's problems, such as intellectual property violations, cyber theft and Beijing's state-backed economic model, will take patience and diplomacy. We'll know more when the White House sends out an official statement.

"If they can respect each other's core interests and engage in equal and earnest consultations, they can expand the scope of their common interests and usher in brighter prospects for their relations".

China imposed a retaliatory 25% tariff on imports of cars from the US over the summer in response to Trump's own tariffs.

Similar proposals have been on the table since last summer. China raised its tariff on auto imports from the US from 15 percent to 40 percent in retaliation for Trump administration tariffs on imports from China.

The Chinese government has repeatedly dismissed U.S. accusations that it uses underhand means to get hold of American technology.

The timetable for China's lowering of tariffs below 40 percent remains unclear.

Xi and his team were likely pushing hard for an end to the tariffs that some analysts have said are partly responsible for slowing China's economic growth and leading worldwide businesses to consider pulling manufacturing out of the country.

It would also help boost global auto manufacturers in the United States such as Tesla, BMW and Daimler.

Trump's aggressive trade actions left in their wake a farm industry suffering from China's retaliation, hitting soybeans especially hard, and a business sector fraught with uncertainty, facing higher costs and holding off on investment.

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Mr. Trump provided no details of how much of a reduction China had agreed to, and Beijing did not immediately confirm that any deal had been reached to readjust the harsh tariffs, which were brought into effect in July amid an escalating trade war. "It's a step in the right direction".

Also, Beijing has neither echoed nor rebutted Trump's claim about China agreeing to "reduce and remove" tariffs on American vehicles.

It remains uncertain how the two sides will resolve underlying U.S. concerns over trade barriers, subsidies and alleged technology theft.

Asian shares were mostly lower Tuesday as investors wondered if a 90-day tariff truce was enough for the US and China to resolve a range of issues from technology development to trade.

"The two sides agreed to mutually open their markets, and as China advances a new round of reforms, the United States" legitimate concerns can be progressively resolved'. Both sides proposed a series of constructive plans on adequately resolving existing differences and issues.

Earlier that day, Trump signed a revamped three-way trade deal with Canada and Mexico, fulfilling a long-standing pledge, though the agreement could face headwinds in Congress. Hong Kong's Hang Seng dropped 0.5 per cent to 27,036.96 and the Shanghai Composite index was flat at 2,654.69.

German Chancellor Angela Merkel, also attending the G20, spoke for many when she urged progress.

Both sides certainly came prepared for serious discussion.

But lingering doubts remain about the strength of investor sentiment.

Questioned about the agreement on Monday, Treasury Secretary Steven Mnuchin and Trump's top economic adviser, Larry Kudlow, dialed back expectations and added qualifiers.