WH to postpone for 90 days a planned hike of US tariffs on Chinese goods

SHANGHAI, Dec 2, (AFP): Donald Trump and Xi Jinping each got something out of hitting pause on a trade war that threatens both of their economies, but analysts stressed that the tenuous truce does little to address the core sticking points of their economic rivalry.

The White House said it would postpone for 90 days a planned increase of US tariffs on Chinese goods, while China pledged to take in more US imports.

The steps temporarily pause an escalating confrontation between the world’s two largest economies that has rattled world markets.

Trump launched the bitter row earlier this year by implementing tariffs on billion of dollars in goods from China, which he accuses of market barriers and predatory practices that Washington says make fair trade impossible. The tariffs prompted titfor-tat responses from Beijing.

After months of sabre-rattling, however, Trump praised an “amazing and productive” meeting with Xi at the G20 on Saturday, and Chinese state mouthpiece Xinhua news agency said the outcome in Buenos Aires “needs to be cherished.”

“This is good news for both countries, and a relief for the international community,” Xinhua said.

The pauses allows Xi to stave off an escalation of the pressure that higher tariffs would place on his country’s slowing economy.

At the same time, Trump – stung by the US Democrats’ congressional win in mid-term elections – can avoid further pain for agricultural US states whose exports of key crops like soybeans to China have been hit, said Beijing-based political consultant Hua Po.

“This was a rare opportunity for China because (the mid-terms) made Trump a lame president. So at this time it was acceptable for China to maintain some bottom lines while making concessions,” Hua said.

But analysts said the two sides remain miles apart on key issues.

Trump may come under pressure once scrutiny of the cease-fire reveals that Xi got off “without yielding any meaningful concessions,” said Brock Silvers, managing director of Shanghai-based investment advisory Kaiyuan Capital.

“The tensions have only been delayed, not resolved, and unless China quickly finds the political will to make a long-term peace via significant concessions on technology issues, this week’s expected gains may prove to be temporary,” he said. Indeed, the truce is only partial. Some $50 billion worth of Chinese imports already face 25 percent tariffs.

And while existing 10 percent tariffs targeting a massive $200 billion in goods won’t rise to 25 percent on Jan 1, as threatened by Trump, they will still remain in effect.

China has targeted $110 billion worth of US imports for tariffs.

Trump also has warned he could slap punitive duties on the remaining $267 billion in Chinese goods coming to the United States.

ANZ Research noted that there were “stark differences” in the public announcements by both sides.

The Chinese side – unlike the US – made no mention of the fact that the postponement of the tariff increase lasts only 90 days, and that they could be raised if upcoming trade talks don’t go well.

“We are unsure how serious the US administration is about the ‘ceasefire’ declaration,” ANZ Research said.