U.S.-China truce brings temporary calm
Trump and Xi pause trade war to work toward a new pact
The agreement reached by President Donald Trump and President Xi Jinping of China to effectively pause their trade war and work toward a pact appears to be aimed at giving the two leaders some political breathing room after an escalating fight had begun inflicting economic damage on both sides of the Pacific.
The temporary truce, forged over a working dinner Saturday night in Buenos Aires, does little to resolve the deep differences between the two nations and is more a political agreement than a substantive one. But both sides immediately positioned the cease-fire as a domestic victory.
“It’s an incredible deal,” Trump said to reporters late Saturday night aboard Air Force One. “If it happens, it goes down as one of the largest deals ever made.”
China’s foreign ministry in a statement characterized the meeting as “very successful,” adding, “The two sides proposed a series of constructive plans on how to properly resolve existing differences and problems.”
The political need for truce has increased as both countries begin struggling with signs of economic softening. China’s debt-heavy economy is slowing more than experts expected, while there are areas of emerging weakness in the U.S. as the effects of Trump’s tax cuts and spending increases begin to wear off.
But the tough road to a more comprehensive trade deal could be seen in the disparity between the official statements released by the U.S. and China.
The United States emphasized the 90-day window it has set for trade talks, while China made no mention of it. And the White House, which has accused China of “stealing” technology from U.S. companies, said that Xi had agreed to “negotiate immediately on forced technology transfer, intellectual property protection, non-tariff barriers and cyber theft.” The statement from China said only that the two countries would “work together to reach a consensus on trade issues” but did not mention intellectual property.
The cease-fire leaves U.S. tariffs in place on $250 billion in Chinese goods, but it removes — for now — Trump’s threat to increase the tariffs on $200 billion of those goods in January to 25 percent from 10 percent and to impose tariffs on all imports from China. The agreement sets a March 1 deadline for a trade deal, which is expected to be brokered by Steven Mnuchin, the Treasury secretary, and Robert E. Lighthizer, the U.S. trade representative.
The agreement also hints that the initial 25 percent tariffs Trump placed on $50 billion in Chinese goods last summer could become permanent — if not in place for a protracted period.
Still, Mnuchin suggested that all the tariffs could be phased out as China meets its commitments to make changes over a period of time.
But waiting for China to actually carry out its trade promises is a high bar to set for removing the tariffs. American and Chinese negotiators have been wrangling over many of the same questions of intellectual property protection, investment access and other issues since China joined the World Trade Organization in 2001.
But China’s willingness to reach any deal for purchases while considerable tariffs remain in place suggested that Beijing officials, as well as Trump, were genuinely eager for a truce.
Critics pointed to Lighthizer’s recent statements that China had made no progress toward addressing the administration’s concerns.
“We put off tariffs for 90 days in exchange for the same things we’ve been negotiating with the Chinese with for over a year,” said Derek Scissors, a China specialist at the American Enterprise Institute. “Why would this 90 days make any difference?”