Trade war ‘on hold’ as US and China carve out deal

The United States and China have stepped back from a trade war, after the Asian giant agreed to “significantly increase purchases” of American goods and services.

The deal was outlined in a statement issued by the White House, which said China would “substantially reduce” the trade deficit between the two countries after more than a fortnight of bilateral talks.

Steven Mnuchin, the US Treasury secretary, said the Trump administration had put the trade war, along with billions of dollars worth of tariffs against China, “on hold”.

President Donald Trump has been vocal about the need for the multibillion-dollar trade imbalance between the nations, which hit a record US$375 billion last year, to be reduced.

But the extent of China’s commitment remains uncertain. Trump officials had claimed that China would buy up to an additional US$200b of US products — but figures were noticeably absent from the statement. American officials will travel to China to hammer out the detail in the coming weeks.

“To meet the growing consump- tion needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services,” the White House statement said.

“This will help support growth and employment in the United States.”

Despite the lack of detail, the agreement will be seen as a de-escalation of the threat of a global trade war.

Economists had warned any further souring of relations would impact on global growth.

Mr Trump has had his sights on tackling the trade deficit with China for years. As early as 2010, he said: “If we don’t get smart quickly, China will destroy our country. I would love to have a trade war with China. Because if we did no business with China, frankly, we will save a lot of money.” At a 2016 rally ahead of the presidential election, he said: “We can’t continue to allow China to rape our country. It’s the greatest theft in the history of the world.”

However, Mr Trump’s rhetoric has softened in office and he has struck up a relationship with Chinese president Xi Jinping. “President Xi and I will always be friends, no matter what happens with our dispute on trade,” he tweeted last month.

Mr Trump intervened in a dispute between Chinese telecoms giant ZTE and the US Department of Commerce earlier this month, after the manufacturer was banned from dealing with US firms for seven years.

The US president said on Twitter: “President Xi of China and I are working together to give massive Chinese phone company ZTE a way to get back into business fast. Commerce department has been -instructed to get it done.”