Pundits Reveal Hidden Aspects of US-China Trade Talks at G20 Summit

Leroy Wright
December 3, 2018

Donald Trump is to meet China's President Xi Jinping after the G20 summit in their first talks since a trade war erupted earlier this year.

It was the first meeting between Xi and Trump since the US president paid a state visit to China in November past year. Hours after the announcement, the US President confirmed the investors' hopes and tweeted: "China has agreed to reduce and remove tariffs on cars coming into China from the US".

Trump and President Xi Jinping met in Buenos Aires, shortly after the annual summit of the world's leading economic powers concluded with a watered-down statement described by one G20 expert as the "lowest common denominator" of global diplomacy. If they fail to reach a deal, the 10% tariffs will rise to 25%.

Shares of German carmakers Daimler AG and BMW AG rallied Monday morning after the US trade deal with China.

President Trump and China's President Xi Jinping agreed Saturday to a 90-day halt on new tariffs, hailed as a ceasefire in the countries' trade war.

A statement from the White House reads: "President Trump has agreed that on January 1, 2019, he will leave the tariffs on $200 billion worth of product at the 10 percent rate, and not raise it to 25 percent at this time". Meanwhile, futures in China dropped on expectations of increased supply, with soybean meal on the Dalian Commodity Exchange losing 3.4 percent to 2,953 yuan a metric ton, the lowest since June.

The two sides also agreed to start discussions on other contentious issues, including intellectual property protection, non-tariff trade barriers and cyber theft.

Elsewhere, Japan's Nikkei 225 edged 1% higher while South Korea's Kospi gained 1.6% and Australia's ASX 200 closed 1.84% up.

"The truce prevented a further increase in tariffs or new tariffs imposed from the USA side".

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"If it happens it goes down as one of the largest deals ever made", Trump told reporters on Air Force One during the return trip from the G20 summit in Buenos Aires.

As Trump economic advisor Larry Kudlow said in Washington ahead of the dinner: "If things don't work out in this US-China summit meeting, he will invoke some 267 billion dollars in additional tariffs".

"China's response today to President Trump is precisely the action our Congressional delegation asked for, and I am grateful to the Chinese leaders for listening to us and taking this action", said the senator.

In July, China reduced auto import duties from 25 per cent to 15 per cent, a boon for worldwide carmakers keen to grow sales in the world's largest auto market. Both companies build cars for the Chinese market at USA plants, which are thus subject to the Chinese tariffs. US agreed to postpone the additional tariffs.

The biggest headline is that both sides have agreed to temporarily hold off on the implementation of new tariffs.

Zhang also noted that it remains unclear whether Washington and Beijing would be able to "come up with an agreement in 90 days".

For example, the Trump administration's concerns about China's alleged theft of US intellectual property remain in place and Beijing's broader push for indigenous advances in its hi-tech sector under the aegis of the "Made in China 2025" initiative have yet to be addressed.

"If they cancel the extra 25 percent tariff on USA -made cars, then we will see positive signs for imported cars", said director of the China Automobile Dealers Association's import committee, Wang Cun, according to Reuters.

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