US and China call truce in trade war
Trump postpones new tariffs after G-20 meet
BUENOS AIRES: The United States and China called a truce in their trade war yesterday after President Donald Trump agreed to hold off on new tariffs and President Xi Jinping pledged to increase Chinese purchases of American products. The two also set the stage for more painstaking negotiations to resolve deeply rooted differences over trade.
The compromise, struck over a steak dinner at the Group of 20 meeting here and announced in a White House statement, was less a breakthrough than a breakdown averted. The two leaders remain far apart on basic issues of market access and trade policy, and there was no sign that either planned to back down on those.
Still, the handshake deal between Mr Trump and Mr Xi, after what the White House called a “highly successful meeting”, pauses what was becoming a headlong race toward economic conflict. It will reassure jittery financial markets, as well as American farmers, who worried about the fallout from a prolonged trade battle.
In a significant concession, Mr Trump will postpone a plan to raise tariffs on US$200 billion (6.6 trillion baht) worth of Chinese goods to 25%, from 10%, on Jan 1. The Chinese agreed to an unspecified increase in their purchases of American industrial, energy and agricultural products, which Beijing hit with retaliatory tariffs after Mr Trump targeted everything from steel to consumer electronics.
The countries set an ambitious deadline of 90 days to reach a broader trade agreement, with the White House warning that if they did not come to terms by then, Mr Trump would raise the existing tariff rate to 25%.
“The relationship is very special — the relationship that I have with President Xi,” Mr Trump told reporters, as he sat across a long table from the Chinese leader before dinner was served. “I think that is going to be a very primary reason why we’ll probably end up with getting something that will be good for China and good for the United States.”
Mr Xi replied, “Only with cooperation between us can we serve the interest of world peace and prosperity.”
For Mr Trump, the agreement was an upbeat end to his subdued visit to the G-20 meeting. He dodged unsavoury friends, smiled through chilly encounters with allies, and cancelled a news conference out of respect for his predecessor, George HW Bush, whose death on Friday was a reminder of the role US presidents once played at these gatherings.
On his second day in Buenos Aires, Mr Trump said little about global security or diplomacy, keeping a single-minded focus on trade. That put leaders like Chancellor Angela Merkel of Germany in an awkward position, because Germany, as a member of the European Union, cannot negotiate by itself with the United States on trade issues.
“We have a tremendous trade imbalance, but we’re going to get that straightened out,” he said before meeting Ms Merkel yesterday morning. “We all understand each other.”
US and Chinese officials conducted quiet talks about a compromise over the last several weeks. But the outcome remained in doubt until the end, when Mr Trump, flanked by his top aides, sat down with Mr Xi and his aides to a meal of grilled sirloin and bottles of Malbec.
Mr Trump had veered from optimism to wariness about a deal, sometimes in the course of a single statement. His economic team offered sharply conflicting advice, with moderates like Treasury Secretary Steven Mnuchin counselling compromise, while hardliners like Peter Navarro, the White House director of trade, urged him to double down on his pressure.
The moderates tried to exclude Mr Navarro from the trip. But at the dinner in a Buenos Aires hotel, he was there at the table, seated between the national security adviser, John R Bolton, and the chief of staff, John Kelly. He leant forward as the president urged Mr Xi to crack down on illicit shipments of the deadly opioid, fentanyl.
The White House said Mr Xi, in a “humanitarian gesture”, had agreed to designate fentanyl as a controlled substance.
China was quick to portray the agreement as a concession by Mr Trump. Wang Shouwen, the vice commerce minister, said the president had agreed to revoke his plan to raise tariffs on certain Chinese goods to 25%.
The Chinese foreign minister, Wang Yi, said, “China is willing to expand imports according to the needs of the domestic market and the people,” which he said would “gradually ease the problem of trade imbalance”.
Of the roughly $250 billion worth of Chinese goods targeted by tariffs, $50 billion is already taxed at 25%, while the remaining $200 billion is taxed at 10%. As part of a series of tit-for-tat moves, Mr Trump said he would raise the tariff for all goods to 25% and consider imposing tariffs on an additional $267 billion worth of exports.
BUENOS AIRES: Leaders of the world’s top economies agreed on Saturday to repair the global trading system as they closed a Group of 20 summit that saw the Trump administration at odds with many allies over the Paris accord on climate change and issues like migration.
The joint statement signed by all 20 member nations said 19 of them reaffirmed their commitment to the Paris climate accord, with the United States, which withdrew from the pact under President Donald Trump, the lone holdout. The official communique acknowledged flaws in global commerce and called for reforming the World Trade Organisation (WTO), but it didn’t mention the word “protectionism’’ after negotiators said that had met resistance from the United States.
Applause broke out in the convention centre hall as the leaders, including Mr Trump, signed off on the statement at the end of the two-day summit in the Argentine capital, the first time it has been held in South America.
The non-binding agreement was reached after marathon talks by diplomats stretched overnight and into daylight, amid deep divisions between member nations. European Union officials said the United States was the main holdout on nearly every issue. Mr Trump has criticised the WTO and taken aggressive trade policies targeting China and the EU.
But China also pushed back in talks on steel, South Africa objected to language on trade, Australia didn’t want the statement to be too soft on migration and Turkey worried it would push too far on climate change, according to the officials.
A senior White House official said the joint statement meets many US objectives and stressed that it includes language about WTO reform. The official also noted other elements such as language on workforce development and women’s economic development and a commitment by China to doing infrastructure financing on “transparent terms’’.
According to the official, the unusual language on climate was necessary for Washington to sign on, and Turkey, Saudi Arabia and Russia had appeared sympathetic to the US position but ultimately stayed with the other countries.
The final language of the statement says, regarding climate, that 19 nations that are signatories to the Paris accord reiterate their commitment to it while the US reiterates its decision to withdraw.
On global commerce, the statement says the 20 countries support multilateral trade but acknowledge that the current system doesn’t work and needs fixing, via “the necessary reform of the WTO to improve its functioning’’.
On migration, European officials said the US negotiator said too much talk about it would have been a “deal-breaker’’ for Mr Trump. So they came up with “minimalist’’ language that acknowledges growing migrant flows and the importance of shared efforts to support refugees and solve the problems that drive them to flee.
The statement also shows a commitment to a “rules-based international order’’, despite Mr Trump’s rejection of many of those rules.
French President Emmanuel Macron called it a victory that the US signed on to the statement at all, given the tensions going into the talks. “With Mr Trump, we reached an agreement,’’ Mr Macron said. “The U.S. accepted a text.’’
Perhaps surprisingly, one country that was seen as particularly constructive was Russia, the EU officials said. Despite tensions over its military actions on Ukraine and political interference abroad, Russia supports international efforts on trade and climate.
Summits like this “don’t take away contradictions’’ among G-20 leaders, Russian President Vladimir Putin said. But he added that “these meetings are useful because countries that are fighting’’ can focus on problems they all agree on such as WTO reform.
The summit statement’s language on climate was welcomed by environmental groups such as the World Wildlife Fund and Greenpeace, the latter of which said in a statement: “The necessity of the US being part of the effort to fight climate change cannot be denied, but this is a demonstration that the US is still the odd one out’’.
While a statement isn’t legally enforceable, the Europeans see it as proof that the G-20 is still relevant.
“Everyone agrees that t he WTO should be reformed,’’ German Chancellor Angela Merkel said. “This is an important agreement.’’