Published: Wed, December 05, 2018
Worldwide | By Myra Stephens

Trump hails US-China relations amid trade detente

Trump hails US-China relations amid trade detente

A misunderstanding during a photograph opportunity at the G20 summit in Buenos Aires has seen US President Donald Trump walk off the stage, leaving Argentina's President Macri alone and confused on the global stage.

Additionally, the United States 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. Whilst Jinping has agreed that Beijing will buy an unspecified, but "very substantial" amount of agricultural, energy, and industrial products from the United States market, to reduce the trade imbalance between the two nations. Both sides have raised tariffs on billions of dollars of each country's goods.

What was agreed at the G20?

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The truce, although temporary, is a positive step towards a resolution to the US-China trade war.

In addition, the USA said China agreed to "purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products from the United States".

On Monday, China's ministry of foreign affairs said the Chinese and USA presidents had agreed to work towards removing all tariffs.

Treasury Secretary Steven Mnuchin told reporters at the White House Monday that there was an "an immediate focus on reducing auto tariffs", though he did not provide details or timing.

What's missing in China's official statement?

Discussions were to begin immediately, with the goal of an agreement within 90 days. China would also buy agricultural products from USA farmers immediately. That would still take effect if the sides can not agree to a larger trade deal within the three-month window.

The president also touted an agreement with China to reduce tariffs on cars entering China from the United States.

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 U.S. farmers. "I'm taking President Xi at his word, at his commitment to President Trump".

What pushed the two sides to the table?

President Donald Trump's Monday morning tweet about the trade deal with China stands in sharp contrast to what's being reported on China's media. 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.

Worries about the economic impact of the tariffs have pushed stock markets lower in recent months. If negotiations fail, Trump says he will impose the tariff increase.

"It's impossible for China to cancel its industry policies or major industry and technology development plans", said economist Cui Fan of the University of International Business and Economics in Beijing.

Will this resolve the dispute?

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USA stock indexes also opened sharply higher in NY at the start of a new work week, with the widely watched Dow Jones Industrial Average of 30 key stocks ahead more than 1.5 percent.

"There should be no wishful thinking that the truce would end the trade war between the world's two largest economies", DBS strategist Philip Wee wrote in a research note.

The outcome wasn't the result of a "significant change" by China, Louis Kuijs of Oxford Economics said in a report.

Both Xi and Trump made concessions in Buenos Aires to temporarily deescalate this trade dispute.

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