On Saturday, President Trump and China’s President Xi Jinping declared a 90-day trade truce, hitting the pause button on the New Year’s tariff hike on $200 billion worth of goods.
According to a statement issued by the White House, Trump and Jinping had a “highly successful meeting” to discuss their trade differences at the G20 Summit in Argentina this past weekend. “This was an amazing and productive meeting with unlimited possibilities for both the United States and China,” Trump said.
China’s Foreign Ministry reiterated that sentiment in a statement issued on Saturday, saying that the meeting as “very successful and reached important consensus, which pointed out the direction for Sino-US (China-US) relations in the coming period.” Foreign Minister Wang Yi said “The two sides proposed a series of constructive plans on how to properly resolve existing differences and problems.”
President Trump has agreed to postpone the 25% tariff hike on List 3 of Chinese imports for 90 days in order to continue negotiating a solution to the issues which started the trade war in the first place: forced technology transfer and intellectual property theft. The original 10% tariffs on those goods will remain in place. While Secretary of Treasury, Steven Mnuchin hinted “that all tariffs could be phased out eventually as China meets its commitments to make changes over a period of time,” the new agreement insinuates that List 1 and List 2 tariffs may remain in effect indefinitely.
In exchange, President Xi pledged to buy “a not yet agreed upon, but very substantial amount of agricultural, energy, industrial, and other products,” in an effort to reduce its $301 billion trade imbalance with the U.S. China has also agreed to reduce the retaliatory tariffs on U.S. auto imports, currently set at 40%.
Furthermore, the White House announced that “President Xi, in a wonderful humanitarian gesture, has agreed to designate Fentanyl as a Controlled Substance, meaning that people selling Fentanyl to the United States will be subject to China’s maximum penalty under the law.”
Trade Talks Resume
President Trump and President Xi have “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. Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time (March 1), the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%.”
The White House also said the two sides will work on issues of national security, including a nuclear-free Korean Peninsula and new regulations to control the production and export of fetanyl.
Negotiations will be led by U.S. Trade Representative Robert Lighthizer. White House trade adviser Peter Navarro told National Public Radio that Lighthizer “is the toughest negotiator we’ve ever had at the USTR, and he’s going to go chapter and verse and get tariffs down, non-tariff barriers down, and end all these structural practices that prevent market access.”
A Word of Caution
At face value, OCEANAIR, Inc. believes that this is good news to both U.S. Importers and Exporters. However, caution should be exercised as there is nothing written in stone as regards the process. Bill Connolly, VP of Customs & Import Compliance, shares “Yes, there is a ’90-day truce’, but we all know that a truce can be broken at any time, and in this trade world today nothing surprises me any longer. I must say that I was pleasantly surprised when this announcement was made, because I was not of the belief that the 2 leaders would come to an agreement over the short conference time span.”
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Sources
- Reuters
- Bloomberg
- The White House
- People’s Republic of China Ministry of Foreign Affairs
- Scarbrough International, Ltd.
- Freightwaves
