China-US trade war on hold, deal pending

The risk of a trade war between the United States and China has diminished after a deal has been made, which means threatened US tariffs and counter tariffs from China may be scrapped.

Avoiding a trade war is better for both countries – and for world trade – than trying to win a war that would adversely affect both countries.

RNZ (BBC): Trade war on hold as US and China halt imposing tariffs

China and the US say they will halt imposing punitive import tariffs, putting a possible trade war “on hold”.

The deal came after talks in the US aimed at persuading China to buy $US200 billion of US goods and services and thereby reduce the trade imbalance.

The US has a $335b annual trade deficit with Beijing.

In March this year, Mr Trump announced plans to impose tariffs on Chinese imports – mainly steel and aluminium.

Beijing threatened equal retaliation, including tariffs on a number of US imports – among them aircraft, soybeans, cars, pork, wine, fruit and nuts.

Two days of talks ended in Washington DC on Friday with a framework agreement.

US Treasury Secretary Steven Mnuchin…

…told Fox News on Sunday that China would buy more US goods “to substantially reduce the trade deficit”.

Concrete numbers had been agreed, he said, although he refused to disclose if this meant China was buying $200bn in return for the US threat to be lifted. US Commerce Secretary Wilbur Ross would travel to China soon, he said, to work on details, which would involve industries – not just the two governments.

“We are putting the trade war on hold. Right now we have agreed to put the tariffs on hold while we try to execute the framework” of the agreement, Mr Mnuchin said.

But he warned that failure to implement it would result in the imposition of the threatened US tariffs.

Chinese vice-premier Liu He…

…said his visit to the US had been “positive, pragmatic, constructive and productive”.

He described a “healthy development of China-US economic and trade relations” which would result in enhanced co-operation in areas such as energy, agriculture products, healthcare, high-tech products and finance.

“Such co-operation is a win-win choice as it can promote the high-quality development of the Chinese economy, meet the people’s needs, and contribute to the US effort to reduce its trade deficit,” he added.

Mr Mnuchin said the new framework agreement included structural changes to Chinese economy to enable fair competition for US companies, but this would take time, China’s vice-premier said.

And, perhaps because of that, he said the two countries “should properly handle their differences through dialogue and treat them calmly in the future”.

That’s a much better threat than making public threats and launching a trade war. But as is normal with the trump administration, there is some uncertainty.

Reuters: U.S., China putting trade war on hold, Treasury’s Mnuchin says

Trump’s top economic adviser, Larry Kudlow…

…told CBS “Face the Nation” it was too soon to lock in the $200 billion figure. “The details will be down the road. These things are not so precise,” he said.

Trump was in a “very positive mood about this,” Kudlow said.

However, he said there was no trade deal reached.

“There’s no agreement for a deal,” Kudlow told ABC. “We never anticipated one. There’s a communique between the two great countries, that’s all. And in that communique, you can see where we’re going next.”

One next step will be dispatching Commerce Secretary Wilbur Ross to China to look at areas where there will be significant increases, including energy, liquefied natural gas, agriculture and manufacturing, Mnuchin and Kudlow said.

So there is a lot of work to do yet.

13 Comments

  1. David

     /  May 21, 2018

    He has done well to get China to agree to look at its quite unfair trade practices its been an issue for decades, NZ has been so lucky with its FTA.
    Lets hope Trump turns his sights on the other serial offender the protectionist EU and within there the crazy Germany situation and their destabalizing, to the EU and others, colossal trade surplus.

    • Blazer

       /  May 21, 2018

      So because Germany is more productive and efficient than other member countries,you want to punish them?
      The U.S still has a vast range of tariffs and …protectionism.

      • David

         /  May 21, 2018

        Germany have an artificially low currency because they are in the Euro with underperforming/ bankrupt countries.

        • Blazer

           /  May 21, 2018

          so ,as they all use the Euro…how is that Germany’s…fault?

          • David

             /  May 21, 2018

            Perhaps because it’s Germany that planned the whole thing?

            • Blazer

               /  May 21, 2018

              of course…its Germany’s fault…the bosche who started WW1,the Hun who started WW2…thank god you didn’t buy a BMW,and opted for a good Indian…Range-Rover!

            • David

               /  May 21, 2018

              “didn’t buy a BMW,and opted for a good Indian…Range-Rover!”

              As I have said before, I have a porsche.

            • Blazer

               /  May 22, 2018

              why do you drive a German car…..?

    • Gezza

       /  May 21, 2018

      Somebody must’ve pointed out to Munchkin that China owns the US and if they retaliated it wasn’t going to end well for the US.

      • David

         /  May 21, 2018

        “Somebody must’ve pointed out to Munchkin that China owns the US and if they retaliated it wasn’t going to end well for the US.”

        Technically, it’s the US that owns China. Large debts tend to work in reverse don’t forget.

    • Gezza

       /  May 21, 2018

      If Trump just sold them a supercarrier that alone would cut $13b off the imbalance. 😐

      • David

         /  May 21, 2018

        I think you will find a supercarrier can cut off a lot more than $13bn…..