Trump Touts Benefits of China Trade Truce for U.S. Farmers

Clay Curtis
December 5, 2018

Trump agreed to postpone the raising of tariffs on goods from China worth United States $200 billion from 10 percent to 25 percent, which had been scheduled for January 1.

China has made more than $1.2 trillion in additional trade commitments as part of a deal reached by U.S. President Donald Trump and China's Xi Jinping and Beijing has vowed to take immediate steps on those promises.

On Twitter, he said farmers would be a "very BIG and FAST beneficiary" and described the meeting with Chinese President Xi Jinping as "extraordinary". It has involved both countries imposing tariffs on billions of dollars' worth of goods, with the U.S. hitting Chinese goods with $250bn of tariffs since July, and China retaliating by imposing $110bn worth of duties on USA products. China raised its tariff on auto imports from the USA from 15 percent to 40 percent in retaliation for Trump administration tariffs on imports from China.

Trump and Xi also agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, according to the White House statement. He said relations have taken a big leap forward, adding, USA farmers will be a very big and very fast beneficiary of the deal after China agreed to purchase more agricultural equipment.

United States exports of cars and light trucks to China were worth US$9.5 billion in 2017 and have dropped off significantly since China imposed its retaliatory tariffs over the summer that gave exporters in Europe and Japan a significant advantage.

China to cut tariffs on United States cars
The Stoxx Europe 600 Index was up by 1.62 percent to 75.9100 at around 09:45 GMT, as carmakers remained at the forefront of gains. In the meantime, just as Trump dialed back the drama on one trade front over the weekend, he magnified the tension on another.

Chinese news outlets also claimed both sides plan to eliminate all tariffs, which doesn't appear in the US statement. Trump and Xi on the sidelines of the Group of 20 summit in Argentina.

The Chinese government said in a statement that both sides seek to reach a "mutually beneficial, win-win agreement". The White House made it clear that the 10 percent tariffs would still leap up to 25 percent if China doesn't meet United States demands in 90 days. But the highly anticipated talks in Buenos Aires have produced a welcome consensus that the two sides will work on ways to resolve their differences. BMW, Tesla, and Ford were among the firms hit hard as collateral damage in the trade war.

Trump, on Air Force One leaving Buenos Aires, told reporters that if a deal happens with China, "it goes down as one of the largest deals ever made". "China will be getting rid of many of 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. First off, China and the USA have a lot of disagreements, and three months is not a lot of time to solve them - especially since the two countries have been at it for over a year.

And while it may have been tacked on to the end of two days of G20 diplomacy, it was in many ways the main event of the weekend. At the start of the dinner, Mr. Trump struck an optimistic note.

"President Xi and I have a very strong and personal relationship". In a bit of good news, a new presidential tweet suggests that at least one facet of the trade war might be approaching an armistice. Mr. Trump had warned that a disappointing outcome could prompt more USA tariffs.

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