President Trump, “My relationship with President Xi is very special.”
The Results so far of that Special Relationship
President Donald Trump and Chinese President Xi Jinping agreed to keep their trade dispute from escalating with a promise to halt the imposition of new tariffs for 90 days as the world’s 2 largest economies negotiate a lasting agreement.
The agreement between the US and China was revealed after dinner Saturday between Presidents Trump and Xi on the sidelines of the G-20 Summit in Argentina.
The 2 world leaders agreed to pause the introduction of new tariffs and intensify their trade talks.
The White House called the meeting “highly successful,” saying the US will leave existing tariffs on $200-B of Chinese goods at 10% and refrain from raising that rate to 25% as planned on 1 January. In exchange, the US received confirmation for immediate start to talks on the US’ biggest complaints about Chinese trade practices:
- Intellectual property theft
- Non-tariff barriers and cyber theft.
After 90 days, if there’s no progress on structural reform, the US will raise those tariffs to 25%.
China also agreed to boost its purchases of agricultural and industrial goods to reduce its trade imbalance with the US immediately.
“This was an amazing and productive meeting with unlimited possibilities for both the United States and China,” President Trump said in the statement. “It is my great honor to be working with President Xi.”
Investors have been eager for signs of a progress toward keeping an already costly trade dispute from spiraling into a new and broader cold war, this event turned the market sentiment positive.
The outcome gives both sides enough to boast of a win without resolving the fundamental differences between them. 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.
The meeting ran longer than scheduled, ending after more than 2 hours.
At the start of the dinner, President Trump struck an optimistic note.
“My relationship is very special, the relationship that I have with President Xi,” President Trump said.
Through a translator, Xi said that “only with cooperation between us can we serve the interest of global peace and prosperity and that is why I look forward to this meeting.” Earlier President Trump signaled that a disappointing outcome could bring on more US tariffs.
The meeting was the 1st face-to-face encounter between the leaders in more than a year, a frame that saw President Trump impose tariffs on billions of dollars in Chinese imports in a bid to force Beijing to halt trade practices the US considers unfair.
In other Key results from the talks
The US promised to uphold the 1-China policy, and China confirmed its support behind further meetings between President Trump and NKorean leader Kim Jong Un.
China agreed to designate the synthetic opioid fentanyl, which has been linked to an epidemic of overdose deaths, as a controlled substance, a move that would expose its sellers to the maximum penalty under Chinese law.
Attending on the US side included Treasury Secretary Steven Mnuchin, Secretary of State Michael Pompeo, US Trade Representative Robert Lighthizer, senior trade adviser Peter Navarro, National Security Adviser John Bolton and Jared Kushner, a senior adviser to the President.
Have a terrific week.
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