TRADE WAR: Europe and Asia stock markets higher as China and US agree CEASEFIRE
05 December, 2018, 04:26
But the highly anticipated talks in Buenos Aires have produced a welcome consensus that the two sides will work on ways to resolve their differences.
In a series of tweets Monday, the president said his meeting with President Xi Jinping was an extraordinary one.
"Farmers will be a a very BIG and FAST beneficiary of our deal with China". The tariff is now 40 percent.
Additionally, the USA had previously threatened to slap tariffs on all remaining Chinese exports if no progress was made at the G20 meetings, which would amount to new tariffs on approximately US$267 billion worth of products. China gets a delay on additional tariffs, while the US gets greater purchases of agriculture goods while retaining leverage to push for more structural changes to the economy.
What was agreed at the G20?
. Trump agreed to delay the scheduled USA tariff increase for 90 days while the two sides negotiate over the administration's technology-related complaints.
Two Presidents have agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and Cybertheft, services and agriculture, which will be targeted to be completed in the next 90 days.
During the meeting in Buenos Aires, the USA agreed not to increase tariffs on January 1, as had been planned, while China agreed to immediately buy more agricultural products from United States farmers. The Trump administration asserts, and many experts agree, that China systematically steals trade secrets and forces the USA and other foreign countries to hand over sensitive technology as the price of admission to the vast Chinese market.
That's precisely why China's statement highlighted Trump's apparent commitment to continue respecting the so-called one China policy - something not mentioned by the Americans.
The very omission of the timeline in the Chinese statements and the short time frame of 90 days remains the two major sources of concern.
The not-so-subtle disparities between the U.S. and Chinese official statements highlight how much a gap needs to closed in the three-month trade war time-out.
"[They have] agreed to reduce and remove tariffs on cars coming into China from the US". Americans will get majority ownership in companies in China for the first time, which should help address those issues, he said on CNBC.
On the non-trade issues, Beijing was more open, announcing that China will tighten supervision of Fentanyl and review rules on the drug.
The tweet comes after the USA and China emphasized different results from Sunday's high-stakes meeting between Trump and Xi.
What pushed the two sides to the table?
"The prospects for real progress on substantive issues with China are now better than at any point in the Trump administration", said Andy Rothman, investment strategist at Matthews Asia. The U.S. now charges a 27.5 per cent tax on imported cars from China.
Asian and European markets rose sharply after news of the cease-fire on trade at this weekend's G-20 summit in Buenos Aires, Argentina. These tariffs also will not be implemented before March 1, 2019.
Carl Weinberg of High Frequency Economics noted that the diverging messages from Xi and Trump after the meeting were creating doubt about what was agreed.
Hong Kong's Hang Seng index is up 2.8 percent, while futures are pointing to a higher open in North America.
'It is hoped that the trade teams from both countries will reach as many practical agreements as possible and as quickly as possible to hasten China-US cooperation, ' the daily said.
However, Andrew Hunter, US economist for Capital Economics, said he is optimistic that the apparent "ceasefire" will hold, even though the two sides have been in similar positions before.
Mr Trump has been willing to declare victory with only modest concessions in the past, pointing to new trade deals with South Korea, Canada and Mexico, he added.
Both sides gained from hitting the pause button, with Trump avoiding further hits to United States agricultural exports, and Xi staving off an escalation of the pressure that higher tariffs would place on his country's slowing economy.