US, China said to reach partial deal, could set up trade truce

Clay Curtis
October 12, 2019

Markets welcomed the partial deal, which lays the groundwork for a broader trade pact between the United States and China. In return, the U.S. will defer a tariff hike which was scheduled for October 15 on roughly $250 billion in Chinese imports. President Trump labeled China a "currency manipulator" earlier this year after Beijing reportedly lowered the value of the yuan. None, however, addresses Trump's complaints and business groups say they have had little impact on foreign companies.

The economic pain appears to have softened Trump's appetite for a fight.

When asked about those tariffs, Trump said: "I think that we're going to have a deal that's a great deal that's beyond tariffs".

US Trade Representative Robert Lighthizer (second from left) talks to China's Vice Premier Liu He (left) during a meeting with US President Donald Trump (centre back) and US Treasury Secretary Steven Mnuchin (right) in the Oval Office at the White House in Washington on Oct 11, 2019. "At the end of the day, if the two sides were not interested in having some progress, they wouldn't even be meeting today". Both leaders will meet at an Asian-Pacific leaders summit in mid-November.

"We will not sign an agreement unless we get and can tell the president that this is on paper".

The U.S. and Chinese negotiators have so far reached their tentative agreement only in principle. "But there is a significant amount of work to do".

Trump noted that it was "a tremendous deal" for American farmers.

Although exact terms are still under discussion, the details the president announced include some of the concessions that China has previously floated, including purchases of agricultural products and limits on Beijing devaluing its currency to gain a competitive advantage.

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Still, the agreement, which came during the 13th round of negotiations, will help to defuse trade tensions that have begun inflicting pain on the global economy and were set to escalate.

The U.S. and China have been trading tit-for-tat tariffs on each other's goods for months, rattling investors, importers and retailers.

Chinese and USA trade officials resumed bargaining efforts on Friday as optimism grew for the two sides to reach an interim agreement and mark a pause in their increasingly damaging trade war.

In commodity markets, crude oil prices gained after an Iranian tanker near the Saudi Arabian coast suffered damage Friday in what the ship's owner suggested may have been a missile attack.

In exchange, Trump said China agreed to buy as much as $50 billion of American farm goods.

Previous apparent breakthroughs have faced opposition in Beijing and seen a resumption of the trade war.

The partial accord, covering agriculture, currency and some aspects of intellectual property protections, represented the biggest step toward resolution of a 15-month tariff war between the world's two largest economies that has hit financial markets and slowed global growth. Comments expressing support for protests in Hong Kong from the general manager for the NBA's Houston Rockets had also prompted an angry response from Chinese state-run news outlets, though The New York Times reported on Thursday that the government was seeking to quell public unrest. The largely symbolic move came amid frustration among U.S. officials that China was counteracting the president's tariffs by devaluing the yuan.

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