CRU: Ceasefire - Trump and Xi Postpone US China Trade War

CRU: Ceasefire - Trump and Xi Postpone US China Trade War

PR Newswire

LONDON, Dec 7, 2018

LONDON, Dec 7, 2018 /PRNewswire/ --

The meeting between Xi and Trump on 1st December turned out to be better than expected. According to the White House press release and Chinese official reports, tariffs will not rise from their current levels over the next 90 days.

Ceasefire – Trump and Xi postpone US China trade war


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Both sides agreed to enter immediate negotiations on 'structural issues'– in other words trade practices. We interpret this as a ceasefire between Trump and Xi, which in our view has the potential to pave the way for a more optimistic trade agreement between the US and China.

Tariffs on hold at 10%

President Trump has agreed not to escalate tariffs further. This means not raising the tariffs on $200 billion of Chinese exports from 10% to 25% on 1st January, as originally scheduled. In return, China agreed to make "very substantial" purchases of US goods, including agriculture (most likely including soybeans) and energy. The US said there would be talks on structural reform covering five areas – forced technology transfer, intellectual property (IP) protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture – are set to start immediately. If there is no progress after 90 days, the US will implement the planned tariff hike.

We expect more market opening by China

Chinese policymakers now face the difficult task of ironing out a deal that is acceptable to the Chinese people but also involves significant enough concessions not to be toppled by the China hawks in the Trump administration.

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