USA and China reach partial trade deal

Remigio Civitarese
Ottobre 12, 2019

The Dow and broader stock market rallied again on Friday after Trump had said the United States and China had reached a preliminary agreement.

However, the interim deal reached on Friday will see planned United States tariff hikes cancelled, settle some questions about currency exchange rates and reverse China's pledge not to buy USA agricultural products.

China, he said, were purchasing products worth USD 16 or 17 billion at the highest point and that would be brought up to USD 40 billion to USD 50 billion. None, however, addresses Trump's complaints and business groups say they have had little impact on foreign companies.

The status of China's Huawei Technologies Co Ltd, the world's biggest telecoms gear maker, which has been put on a US trade blacklist since May, was not part of the deal, Lighthizer said.

Trump told reporters at the Oval Office that phase one of the trade deal will be written over the next three weeks.

"I don't think our farmers can produce that much", Trump joked.

For now, the two sides have come to "almost a complete agreement" on both financial services and currency issues, Treasury Secretary Steven Mnuchin said.

After earlier attempts at a truce between Trump and his Chinese counterpart Xi Jinping did not pan out businesses remained cautious, Innes said. "But there is a significant amount of work to do".

The prospect of a trade deal also helped calm fears of a recession that had simmered in recent months.

Over the past year and a half, the USA and China have imposed new duties on billions of dollars in imports coming from either country.

China has agreed to buy $US40 billion to $US50 billion in USA farm products as the world's two biggest economies reached a ceasefire in their 15-month trade war. Oil prices increased by 2.3% buoyed import prices.

"The idea is to make investors more confident so they're willing to invest", he said.

Previous apparent breakthroughs have faced opposition in Beijing and seen a resumption of the trade war. The Federal Reserve said Friday that it will start buying Treasury bills to boost its balance sheet to avoid the unexpected strains in money markets experienced last month.

Beijing has been reluctant to make the kind of substantive policy reforms that would satisfy the administration.

Trump imposed curbs in May on sales of American components and technology to Huawei Technologies Ltd., China's first global tech brand. On Friday he said he had decided that a phased approach was appropriate. "It's not part of this agreement. That's a separate process".

"I think we have a fundamental understanding on the key issues". "China wants it badly".

In a step in towards that, China recently announced a timetable to remove foreign ownership limits in finance companies beginning next year.

"The Chinese vice premiere said it was agreed that keeping the China-US economic relationship right would be in the interest of the two sides and the whole world".

A further escalation of the trade war will slice 2% off China's real gross domestic product and 0.6% of USA real GDP in 2020, the International Monetary Fund said in a forecast released Friday.

"Talk was getting tough", the president said, adding that both sides had "planes" and "ships" and that "stupid things can happen".

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