China and the United States agreed to a ceasefire in their bitter trade war on Saturday after high-stakes talks in Argentina between US President Donald Trump and Chinese President Xi Jinping, including no escalated tariffs on January 1.
Trump will leave tariffs on $200 billion worth of Chinese imports at 10 per cent at the beginning of the new year, agreeing to not raise them to 25 per cent “at this time”, the White House said in a statement.
“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries,” it said.
“China has agreed to start purchasing agricultural product from our farmers immediately.”
Reuters reported, the two leaders also agreed to immediately start talks on structural changes with respect to forced technology transfers, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, the White House said.
Both countries agreed they will try to have this “transaction” completed within the next 90 days, but if this does not happen then the 10 per cent tariffs will be raised to 25 per cent, it added.
The Chinese government’s top diplomat, State Councillor Wang Yi, said the negotiations were conducted in a “friendly and candid atmosphere”.
“The two presidents agreed that the two sides can and must get bilateral relations right,” Wang told reporters, adding they agreed to further exchanges at appropriate times.
“Discussion on economic and trade issues was very positive and constructive. The two heads of state reached consensus to halt the mutual increase of new tariffs,” Wang said.
“China is willing to increase imports in accordance with the needs of its domestic market and the people’s needs, including marketable products from the United States, to gradually ease the imbalance in two-way trade.”
“The two sides agreed to mutually open their markets, and as China advances a new round of reforms, the United States’ legitimate concerns can be progressively resolved.”
The two sides would “step up negotiations” toward full elimination of all additional tariffs, Wang said.
The announcements came after Trump and Xi sat down with their aides for a working dinner at the end of a two-day gathering of world leaders in Buenos Aires, their dispute having unnerved global financial markets and weighed on the world economy.
After the 2-1/2 hour meeting, White House chief economist Larry Kudlow told reporters the talks went “very well,” but offered no specifics as he boarded Air Force One headed home to Washington with Trump.
China’s goal was to persuade Trump to abandon plans to raise tariffs on $200 billion of Chinese goods to 25 per cent in January, from 10 per cent at present. Trump had threatened to do that, and possibly add tariffs on $267 billion of imports, if there was no progress in the talks.
With the United States and China clashing over commerce, financial markets will take their lead from the results of the talks, widely seen as the most important meeting of US and Chinese leaders in years.
The encounter came shortly after the Group of 20 industrialized nations backed an overhaul of the World Trade Organization (WTO), which regulates international trade disputes, marking a victory for Trump, a sharp critic of the organization.
Trump told Xi at the start of their meeting he hoped they would achieve “something great” on trade for both countries. He struck a positive note as he sat across from Xi, despite the US president’s earlier threats to impose new tariffs on Chinese imports as early as the next year.
He suggested that the “incredible relationship” he and Xi had established would be “the very primary reason” they could make progress on trade.
Xi told Trump that only through cooperation could the United States and China serves the interest of peace and prosperity. Washington and Beijing have also increasingly been at odds over security in the Asia-Pacific region.
At the same time, Trump again raised with Xi his concern about the synthetic opioid fentanyl being sent from China to the United States, urging the Chinese leader to place it in a “restricted category” of drugs that would criminalize it.
The White House said Xi, “in a wonderful humanitarian gesture”, had agreed to designate fentanyl a controlled substance.
Xi also said that he was open to approving the previously unapproved Qualcomm-NXP deal should it again be presented to him, the White House added.
“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,” Trump said in the statement.