Just the Facts
Five Facts on the US-Chinese Trade Truce
By Emma Petasis
December 4, 2018 | Blog
On December 2nd, 2018, the US and China agreed to a truce to deescalate trade tensions, following a working dinner at the G20 Summit in Buenos Aires, Argentina. Here are five facts on the US-Chinese Trade Truce.
The Truce has an expiration date.
U.S. President Donald Trump and Chinese President Xi Jinping agreed to a provisional trade truce that will see the U.S. hold off on new tariffs for 90 days (until March 1, 2019) as the two sides work towards a larger trade deal. By this date, US and Chinese officials are expected to return to the table to address 5 key issues surrounding US-Chinese trade relations: rules surrounding intellectual property, forced technology transfers, non-tariff barriers, cyber intrusion, and cyber theft. If an agreement is not reached, US tariffs on Chinese imports with be raised as originally announced.
With the truce both nations have agreed to concessions- the US will stop increasing tariffs while China will purchase more US products.
More specifically, the US will refrain from increasing the tariffs that were slated to increase from 10 percent to 25 percent on January 1, 2019 and will not impose previously threatened tariffs on an additional US $267 worth of Chinese goods. In turn, China has agreed to purchase more US goods – specifically agricultural and energy products. China also agreed to crack down on the production and distribution of the synthetic opioid drug Fentanyl, which is produced primarily in China. President Trump also relayed that China had agreed to cut import levies on American-made cars.
The truce boosted global markets.
The truce was announced over the weekend and on Monday, stocks rose to their highest in about three weeks. But in a sign of just how fragile this truce is, the gains were given back and then some on Tuesday, when the Dow Jones Industrial average plunged almost 800 points amidst fears the truce could fall apart.
The next date to watch in the US-China trade war is Dec. 18.
Scott Kennedy of the Center for Strategic and International Studies noted that China marks its 40th anniversary of its economic reforms and an opened economy on Dec. 18. This occasion could be used by Beijing to emphasize its commitment to transform its economy in the coming years, Kennedy notes. In addition to Beijing’s actions surrounding the 18th, developing relationships in Washington could also give indication on where US-Chinese relations stand, Kennedy said. Key figures to watch include US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, who recently brokered the new North American trade deal.
Despite White House Officials praising the Trade Truce, the Chinese Official Report shows discrepancies.
China’s official summary of the Buenos Aires meeting did not include the 90-day deadline, or many of the Chinese concessions outlined by America. Additionally, Chinese-language state media outlets reported that Chinese Foreign Minister Wang Yi stated both nations will work towards eliminating all tariffs, something not mentioned in the US Statement. Chinese State Media also said the two nations discussed North Korea denuclearization and the “One China Policy” regarding Taiwan, also not included in the White House Statement. These inconsistencies may affect later negotiations, as the US and China look to reach agreement by March 1st.