Update: Well over an hour after “the most anticipated dinner between US and Chinese presidents in years” was over, Chinese state-run TV, CGTV, finally reported that Trump and Xi had agreed to keep the US-Chinese trade war from escalating with a promise to temporarily halt the imposition of new tariff, effectively declaring a truce.
As part of the truce reached between the two leaders, no additional tariffs will be imposed after Jan. 1, CGTN reported.
Meanwhile, according to the White House, Trump and Xi had a “highly successful meeting”, with the White House saying that Trump had agreed to leave tariffs on US products at a 10% rate after January 1 as China agreed to buy a substantial amount of products from the US.
However, the trade war “truce” is only temporary: after 90 days, if a trade pact is not reached between the US and China, the tariffs will rise to 25% after all.
- TRUMP AGREED TO LEAVE TARIFFS OF PRODUCTS AT 10% RATE ON JAN.1
- WHITE HOUSE SAYS U.S., CHINA AGREE TO 90-DAY NEGOTIATION ON RANGE OF SUBJECTS: DJ
- IF CHINA, U.S. DON’T REACH PACT, TARIFFS TO RISE TO 25%: WH
- U.S., CHINA TO STEP UP TALKS ON CANCELING ALL TARIFFS: WANG
- XI OPEN TO APPROVING QUALCOMM-NXP DEAL IF PRESENTED AGAIN: U.S.
Meanwhile, in order to achieve the temporary ceasefire, and in what may be seen as a victory for Trump, the White House said that China has agreed to start purchasing “very substantial” US agricultural, energy, industrial and other products “immediately” from the US to reduce the trade imbalance.
Again, unless there's more here than meets the eye, this is hardly the predicted "cave" by Xi begging for mercy for US trade pressure. Not even close. Buying farm goods for tariff time-out is basically status-quo-ante, which is what China wants.
— Patrick Chovanec (@prchovanec) December 2, 2018
Xi 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,” Sarah Huckabee Sanders says, quoted by Bloomberg. If China actually enforces this, could help reduce opioid deaths.
NEW: Xi 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,” Sarah Huckabee Sanders says.
If China actually enforces this, could help reduce opioid deaths.
— Jennifer Jacobs (@JenniferJJacobs) December 2, 2018
Finally, the White House also said that president Xi is open to approving the Qualcomm-NXP deal if it was presented again. And just like the the mega-M&A arb is back on the screen.
Back in China, Vice Commerce Minister Wang Shouwen spoke to reports and said that US and China agreed to step up talks on canceling all tariffs.
Finally, China’s foreign minister Wang Yi held a briefing in which he said that US-China relations must be good following constructive trade talks, and that the two nations had agreed to exchange bilateral visits. Yi also said that China and the US had agreed to open markets to each other, with China agreeing to increase US imports as well as addressing its trade imbalance. Wang also said that legitimate US concerns will be resolved as China open and that China will step up talks to eliminate all tariffs.
In short, Wang Yi said that Trump and Xi will step up talks to eliminate all tariffs, while in a blow to US-Taiwan relations, the Chinese foreign minister also said that the US would agree to continue upholding the one China policy.
The truce was expected by many and hinted at by Trump’s optimistic tone at the start of the dinner: “My relationship is very special, the relationship that I have with President Xi,” Trump said as the two men were seated. “This is going to be a very primary reason why we are probably going to be ending up.
That said, aside from preserving the status quo on the current state of the trade war which means no additional tariffs and no hikes to the tariffs rates, nothing has really changed besides a few vague promises from both sides to reach trade utopia, something which both sides know will never happen.