After Dow drops, President Trump seeks to reassure investors on China

Fredrick Soto
December 7, 2018

After a meeting between President Donald Trump and China's President Xi Jinping, a truce in the trade dispute between the USA and China has been struck, and additional tariffs raising the level to 25% will not be implemented on January 1, as announced earlier this year.

"Very strong signals being sent by China once they returned home from their long trip, including stops, from Argentina", he wrote. And then on Wednesday morning, Trump tweeted that he believed Xi "meant every word of what he said at our long and hopefully historic meeting".

The United States and China have been engaged in a trade war that was triggered when Trump announced in June that $50 billion worth of Chinese goods would be subject to 25 percent tariffs in a bid to fix the US-Chinese trade deficit.

The mood has quickly soured, however, on skepticism that the two sides can reach a substantive deal on a host of highly divisive issues within the 90-day negotiating period.

Beijing pledged to import more U.S. products to narrow its massive trade surplus with the United States following the Argentina talks, but it has given few details about what was agreed.

By Wednesday, Tariff Man had tweaked his message to suggest more optimism on the odds of forging a deal with President Xi Jinping.

China said Thursday it would "immediately" implement measures agreed under a trade war truce with the United States - and was confident it could reach a deal within 90 days.

Trump warned that although he and Xi want to get to an agreement "remember, I am a Tariff Man". On the other side are those coalescing around U.S. Trade Representative Robert Lighthizer, who contends that China's pilfering of American technology and protecting its companies from U.S. competition are fundamental to the country's economic strategy.

Steven Mnuchin, the Treasury secretary, said that China had agreed to buy US$1.2 trillion of American products, but he could not offer specifics.

The tone of Trump's latest tweets show an apparent shift from 24 hours earlier, when he was unreservedly triumphant, saying relations with China had taken a "BIG leap forward".

Wall Street fell off a cliff yesterday, losing 3% or more of its value after president Donald Trump confirmed nothing much had changed following his meeting with Chinese president Xi Jinping on December 1.

The catch: the ceasefire is just for 90 days, after which the US could revert to its tariff-raising plan if it sees no progress on structural reform.

Donald Trump threatened to slap a range of import penalties on Chinese products if they didn't make major changes in their economic relationship with the US.

The two sides would also discuss intellectual property protection, technology cooperation, market access and fair trade, and "work hard to reach a consensus", Gao said.

As yet, Chinese officials have not commented on Trump's claims that they would reduce tariffs on US-made cars or begin "immediate" purchases of USA crops, said the BBC.

But Mnuchin added, "If that's real" - thereby raising some doubt - it would close the USA trade deficit with China, and added: "We have to have a negotiated agreement and have this on paper".

The president also seemed less focused than he has been in the past on the US trade deficit with China - widely seen by most economists as a red herring in the trade relationship - and more focused on, as he tweeted, leveling the playing field between USA and China firms.

He added: "When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so".

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