Trump Boasts of Relations with Xi, New Trade Deal with China

Stocks markets in China had a mini surge after the trade war truce at the weekend heading into red territory which means they posted gains

The truce was formed following a high-stakes working dinner on the sidelines of the G20 meetings in Buenos Aires, Argentina on December 1, 2018. It then raised tariff rates to 40 percent amid the escalating trade war with the U.S.

Farmers sold $19.6 billion in products to China previous year, according to the Farm Credit Administration Office of Regulatory Policy.

The US statement also lays out major issues for discussion in the coming 90 days and types of American products that China promises to purchase, while the details are not disclosed by the Chinese government and barely reported by the heavily regulated Chinese domestic media outlets.

With the ceasefire, the above tariffs will remain in place.

Saturday's agreement means US tariffs on $200 billion of Chinese goods will hold at 10 percent instead of rising to 25 percent on January 1.

China's official statement underlines that no higher tariffs will be imposed on January 1, 2019, but it does not mention the 90-day deadline.

In China, tariffs have also weighed on the economy.

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

The outcome was "as good as we could have expected", the chairman of the American Chamber of Commerce in China, William Zarit, said in a statement. Ford decided not to import a crossover-ized Focus from China, Volvo began sourcing the XC60 from Sweden rather than from China, Buick considered canceling the American-spec Envision, and Cadillac stopped selling the hybrid CT6 it builds on the outskirts of Shanghai.

In addition, the U.S. 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". The statement notes that the exact amount has not yet been agreed upon.

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"Still, one must presume that as the existing and proposed tariffs are to spur China to address the US' IPR concerns, only action directly related to that would ultimately impact the 301 tariffs", he said. "That appears to have been a key consideration for Trump, who became more open to a deal as U.S. stock markets weakened in October and November".

The two sides will intensify negotiations to resolve the key issues, including non-tariff barriers, intellectual property protection, cybertheft, and more, according to a statement from the White House. "China has agreed to start purchasing agricultural product from our farmers immediately". Fentanyl is a synthetic opioid primarily produced in China that has caused thousands of deaths in North America in recent years.

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

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

Nevertheless, businesses should continue to brace themselves for heightened tariffs. We make the finest and cleanest product in the World, and that is what China wants. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed.

Further, the differences between the statements released by the United States and China suggest that the two sides hold substantial gaps about expectations for negotiations.

Trump imposed a tariff hike of 25 percent on $50 billion of Chinese imports in July over complaints Beijing steals or pressures companies to hand over technology.

Moreover, the Chinese statement omits some of the USA language and tends to refer to its commitments in broader terms.

For a look at what else the two sides have agreed to, check out this handy side-by-side from Bloomberg reporter Peter Martin.

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