Truce leaves issues unresolved

The Trump administration and China declared a temporary truce yesterday in their 15-month trade war, but the grievances that led them to impose tariffs on hundreds of billions of dollars worth each other’s goods remain largely unresolved.

The administration agreed to suspend a tariff hike on US$250 billion (NZ$395b) worth of Chinese imports that was set to take effect on Wednesday. China agreed to buy up to US$50b (NZ$79b) worth of US farm products.

The de-escalation in tensions between the world’s two largest economies was welcomed by financial markets.

US President Donald Trump announced the ceasefire during a White House meeting with the top Chinese negotiator, VicePremier Liu He.

The news followed two days of talks in Washington, DC, the 13th round of negotiations between the two countries’ delegations.

Many of the details, though, remain to be worked out. And some of the thorniest issues – such as US allegations that China forces foreign companies to hand over trade secrets – were dealt with only partially, or not at all, and will require further talks.

The negotiators have so far reached their tentative agreement only in principle. No documents have been signed.

The threat of escalation still hangs over the two countries. Trump has yet to drop plans to impose tariffs that are set to take effect on December 15 on an additional US$160b (NZ$253b) worth of Chinese products – a move that would extend the sanctions to just about everything China ships to the US.

While providing scant details of what was agreed, the White House said Beijing had pledged to be more transparent about how it sets the value of its currency, the yuan. The administration has long accused China of manipulating the yuan lower to give its exporters a competitive edge in foreign markets.

China had also agreed to open its markets to US banks and other financial services providers, Treasury Secretary Steven Mnuchin said.

The administration still has in place tariffs on more than US$360b (NZ$568b) worth of Chinese imports. What changed yesterday was that Trump suspended plans to raise existing tariffs on US$250b worth of Chinese products from 25 to 30 per cent next week.

Beijing has hit back by taxing about US$120b (NZ$189b) worth of US goods, focusing on agricultural products in a shot at Trump supporters in rural America.

Last year, US farm exports to China plummeted 53 per cent to less than US$9.2b. The additional Chinese purchases promised yesterday could provide an economic boost to hard-hit US farmers.

The two sides were close to a more comprehensive deal in early May, but talks stalled after the administration accused China of reneging on earlier commitments.

Myron Brilliant, executive vice-president of the US Chamber of Commerce, drew encouragement from yesterday’s developments. ‘‘Finally, a ray of hope for the US-China trade relationship,’’ he said.

‘‘Finally, a ray of hope for the USChina trade relationship.’’ Myron Brilliant, US Chamber of Commerce