U.S. Announces Cease-fire on New China Tariffs; China to Start Purchasing U.S. Ag, Energy Products

Posted on 12/02/2018 7:35 AM

Truce-and-purchase agreement are major steps in path to permanent solutions

 


The United States and China called a truce in their trade war on Saturday after President Trump agreed to hold off on new tariffs and President Xi Jinping pledged to immediately increase an unspecified amount of Chinese purchases of U.S. agricultural and energy products. Chinese Foreign Minister Wang Yi said, “China is willing to expand imports according to the needs of the domestic market and the people,” which he said would “gradually ease the problem of trade imbalance.”

     The two also set the stage for more negotiations that in mid-December hope to resolve other contentious differences over trade and other thorny topics.

     Some observers described the developments has not a breakthrough but a breakdown averted.

     The countries set a deadline of 90 days to reach a broader trade agreement, with the White House warning that if they did not come to terms by then, President Trump would raise the existing tariff rate to 25%.

 

The White House announced Saturday night that China has agreed to “start purchasing agricultural products from our farmers immediately” and that the U.S. has agreed to hold off on a planned increase in the rate on $200 billion in tariffs on Chinese goods and a cease-fire on additional tariffs as the two sides enter negotiations on lingering contentious issues. According to the White House, Beijing agreed to purchase a “very substantial” amount of agricultural, energy, industrial, and other products from the United States. Chinese Foreign Minister Wang Yi said “China is willing to expand imports according to the needs of the domestic market and the people,” which he said would “gradually ease the problem of trade imbalance.” Link to White House statement. Link to questions farmers and traders are asking regarding the developments.

 

The relationship is very special — the relationship that I have with President Xi,” President Trump told reporters as he sat across a long table from the Chinese leader before dinner was served. “I think that is going to be a very primary reason why we’ll probably end up with getting something that will be good for China and good for the United States.” Xi replied, “Only with cooperation between us can we serve the interest of world peace and prosperity.”

 

What happens next is being given different spins by both countries.

 

This was an amazing and productive meeting with unlimited possibilities for both the United States and China. It is my great honor to be working with President Xi,” President Donald Trump said in a statement.

 

According to the White House, the two nations will next discuss complex issues of Chinese economic policy, including forced technology transfer, intellectual-property protection, non-tariff barriers, cyberintrusions and cybertheft, services and agriculture. The two sides would “endeavor” to wrap up the talks in 90 days. Should the talks fail, the White House said, the tariffs on the $200 billion of goods would increase to 25% from the current 10%. The tariffs were set to increase to that level on Jan. 1.

 

"China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products from the United States to reduce the trade imbalance between our two countries," the White House said in a statement. "China has agreed to start purchasing agricultural products from our farmers immediately." China's buys of a host of U.S. ag products have largely dried up as a result of retaliatory tariffs put in place by China in response to the U.S. putting tariffs on $250 billion in Chinese goods. China put tariffs in place on products like U.S. soybeans, pork, sorghum and other ag items.

 

Chinese Foreign Minister Wang Yi and Commerce Vice Minister Wang Shouwen, in a press briefing, said only that the talks would focus on removing all U.S. tariffs and Chinese retaliatory tariffs and made no mention of a deadline.

 

The deal followed a dinner between President Trump and President Xi Jinping. It won immediate praise from business groups that oppose tariffs and have urged the administration to take a different path in pressuring Beijing.

 

China officials will resume negotiations in Washington in mid-December.

 

The 90-day time frame given by the U.S. means the talks would wrap up around March 1, just before China’s annual national legislative session. The U.S. is demanding sweeping changes in China’s trade policy, which some observers believe the Communist government might find politically difficult to enact and impossible to enforce.

 

The White House also announced that President Xi said he would consider again the previously unapproved merger between Qualcomm Inc. and NXP Semiconductors NV, should the deal be presented. Chinese officials at the press briefing didn’t mention that pledge. The proposed merger fell apart earlier this year after Beijing failed to approve it.

 

Meanwhile, both countries agreed that China would designate the heavily addictive opioid Fentanyl as a controlled substance, subjecting those selling the drug to criminal penalties. The White House labeled that as a "wonderful humanitarian gesture.

 

They also said China would help the U.S. in its efforts to get North Korea to give up nuclear weapons. "It was also agreed that great progress has been made with respect to North Korea and that President Trump, together with President Xi, will strive, along with Chairman Kim Jong Un, to see a nuclear free Korean Peninsula," the White House said.

 

Wang, China’s foreign minister, said the U.S. had agreed to continue to adhere to the one-China policy, where Beijing asserts that Taiwan is a part of China. The White House statement did not mention that issue.

 

Speaking to reporters aboard Air Force One, Trump called the agreement an "incredible deal. What I would be doing is holding back on tariffs. China will be opening up. China will be getting rid of tariffs." He reiterated the commitment by China to purchase a "tremendous amount of agricultural and other product" from the United States, saying it will have "an incredibly positive impact on farming."

 

From the Chinese side, Wang told reporters in Argentina that the agreement "effectively prevented the expansion of economic frictions between the two countries. Facts show that joint interests between China and the United States are greater than the disputes, and the need for cooperation is greater than frictions."


 

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