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Four big differences that could endanger Trump and Xi's trade deal

Four big differences that could endanger Trump and Xi's trade deal”

China will roll back tariffs on US-made cars, US President Donald Trump said, unveiling another potential breakthrough in a trade war truce that cheered stock markets on Monday.

US President Donald Trump and his Chinese counterpart Xi Jinping on Saturday agreed to suspend any new tariffs in the escalating trade war between the world's two largest economies.

On Twitter, he said farmers would be a "very BIG and FAST beneficiary" and described the meeting with Chinese President Xi Jinping as "extraordinary". Very good things will happen.

National Economic Council Director Larry Kudlow said he, Mnuchin and U.S. Trade Representative Robert Lighthizer had lunch with China's vice premier in Argentina and he told them that Beijing would move immediately on the new commitments.

Trump and Xi also agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, according to the White House statement.

The Trump administration also said China would 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". The tariff is now 40 percent.

On Monday, China's foreign ministry said economic teams in both countries had been instructed to "intensify talks" towards removing all tariffs following the G20 meeting. Some economists said Xi might be ready to negotiate in earnest.

The steps agreed so far seem to be leading trade agreements down the right path. Beijing has also agreed to designate Fentanyl as a controlled substance, which is great news it is reportedly causing an epidemic of opioid-related deaths in the US.

"This agreement at least postpones further escalation in the trade war, avoiding an outcome that would have roiled financial markets", Eurasia Group analysts wrote in a research note.

However, if during this negotiation period, the two countries fail to reach a consensus, the United States will raise their tariffs to 25 percent, the White House said.

"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. "As that picture is getting bigger, we can accept those differences while acknowledging them peacefully, and be more active and open-minded in solving problems through interaction".

However, the truce may well be "less a breakthrough than a breakdown averted", as the New York Times puts it, since China and the USA have very different perspectives on even basic issues such as trade policy and market access, and both show little willingness to compromise. 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. But, taken at face value, the president's comments should allow companies who build cars in America and sell them in China to breathe a sigh of relief. "Farmers, I LOVE YOU!" the USA president tweeted.

"President Xi and I have a very strong and personal relationship". Mr. Trump had warned that a disappointing outcome could prompt more US tariffs.



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