Trump and Xi agreement buys time in trade war

Trump and Xi agreement buys time in trade war

Shares of Chinese vehicle dealers also perked up on hopes that such a move could revitalize the domestic auto market that is poised for its first annual sales contraction in decades amid cooling economic growth and a debilitating U.S.

Analysts at Danske Bank suggest that markets in Asia were buoyed by the trade agreement between the U.S. and China at this weekend's G20 meeting as the agreement between the United States and China provided a 90-day truce allowing for negotiations on a permanent trade deal.

Xi Jinping. Photo: G20 Argentina, via Flickr. According to S&P Dow Jones Indices, the S&P 500 closed with a gain or loss of 1 percent or more on 18 of 44 trading days in October and November.

"It prevents the economic and trade frictions from expanding and opens new prospects for cooperation", Geng said. "What I'll be doing is holding back on tariffs". But both leaders still face a complicated mix at home of economic nationalists, free trade advocates and other conflicting forces.

The specter of a global trade war has hovered over the market since March, when Trump announced tariffs on imported steel and aluminum.

Trump tweeted late Sunday that 'China has agreed to reduce and remove tariffs on cars coming into China from the U.S. now the tariff is 40%.' There was no Chinese announcement about possible tariff cuts, and the Ministry of Commerce in Beijing didn't immediately respond to questions.

Duties of 10 per cent now on most of those goods are set to rise on January 1 to a whopping 25 per cent if a deal isn't reached. If they can't, the higher US tariffs will go into effect on the $200 billion in Chinese imports.

The U.S. and China also made progress on the regulation of fentanyl, which is 50 times more powerful than heroin. The world, Xi said, has witnessed a lot of changes since then.

It is linked to "intense geopolitical competition" with Washington.

The United States and China will carry forward negotiations over a 90-day period; if that period expires without a satisfactory comprehensive agreement - an all too likely outcome - further escalation will take place.

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"It's easy to see the trade deal as a half empty - that it's just a postponement and that they'll work together but that there really isn't any kind of resolution", said Jeff Kleintop, chief global investment strategist at Schwab Center for Financial Research.

The healthy increases paved the way for sharp rises on European and U.S. exchanges later on Monday with futures trade seeing the FTSE100 opening up by 1.6% and the Dow Jones industrial average on Wall Street expected to leap 2%.

While Mr Xi agreed to buy an unspecified but "very substantial" amount of agricultural, energy, industrial and other products, the White House said. But they have been overshadowed by the tariff battle.

Before the dinner of grilled sirloin, red onions, goat ricotta and dates, Trump told reporters that "we'll be discussing trade and I think at some point we are going to end up doing something that is great for China and great for the United States". European automakers BMW (+4.8%) and Daimler (+4.5%) also gained.

Threats of additional USA penalties loom in the background.

Mr Trump said he hoped they would reach a deal during their dinner in Buenos Aires to defuse trade disagreements and said he believed Beijing wanted this.

Trump last week ordered a separate review of China's 40 per cent tariff on vehicle imports from the U.S., 25 percentage points of which are the result of Chinese retaliation against Trump's own tariffs on imports from China.

Facing criticism that he'd gone soft on China, Trump backed away from Mnuchin's deal and chose to proceed with tariffs.

Foreign carmakers have long pleaded for freer access to China's auto market, while its own manufacturers are trying to expand overseas.

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