The United States and China reached a 90-day cease-fire in a trade dispute that has rattled financial markets and threatened world economic growth. The breakthrough came after a dinner meeting Saturday between President Donald Trump and Chinese leader Xi Jinping at the Group of 20 summit in Buenos Aires.
Also, Trump said aboard Air Force One that he will shortly be providing formal notice to Congress that he will terminate the North American Free Trade Agreement, giving lawmakers six months to approve the replacement he recently signed.
Trump agreed to hold off on plans to raise tariffs Jan. 1 on $200 billion in Chinese goods. The Chinese agreed to buy a “not yet agreed upon, but very substantial amount of agricultural, energy, industrial” and other products from the United States to reduce America’s huge trade deficit with China, the White House said.
The truce buys time for the two countries to work out their differences in a dispute over Beijing’s aggressive drive to supplant U.S. technological dominance.
In another long-sought concession to the U.S., China agreed to label fentanyl, the deadly synthetic opioid responsible for tens of thousands of American drug deaths annually, as a controlled substance.
Speaking to reporters aboard Air Force One while returning to Washington from Argentina, Trump says: “I will be formally terminating NAFTA shortly.”
Seeking to gain leverage with skeptical lawmakers to approve the revised trade pact, Trump says Congress “will have a choice” as it considers the agreement he signed with the leaders of Mexico and Canada on Friday during the Group of 20 summit.
He says they can choose between the United States-Mexico-Canada Agreement or “pre-NAFTA, which works very well.”
The White House announcement on China and tariffs framed a victory for Trump and his unflinching negotiating tactics, securing a commitment from China to engage in talks on key U.S. economic priorities, with little obvious concession by the U.S. Notably, however, the White House appears to be reversing course on its previous threats to tie trade discussions to security concerns, like China’s attempted territorial expansion in the South China Sea.
“It’s great the two sides took advantage of this opportunity to call a truce,” said Andy Rothman, investment strategist at Matthews Asia. “The two sides appear to have had a major change of heart to move away from confrontation toward engagement. This changes the tone and direction of the bilateral conversation.”
The Trump-Xi meeting was the marquee event of Trump’s whirlwind two-day trip to Argentina for the G-20 summit after the president canceled a sit-down with Russian President Vladimir Putin over mounting tensions between Russia and Ukraine. Trump also canceled a Saturday news conference, citing respect for the Bush family following the death of former President George H.W. Bush.
Trump said Bush’s death put a “damper” on what he described as a “very important meeting” with Xi.
The United States and China are locked in a dispute over their trade imbalance and Beijing’s tech policies. Washington accuses China of deploying predatory tactics in its tech drive, including stealing trade secrets and forcing American firms to hand over technology in exchange for access to the Chinese market.
Trump has imposed import taxes on $250 billion in Chinese products — 25 percent on $50 billion worth and 10 percent on the other $200 billion. Trump had planned to raise the tariffs on the $200 billion to 25 percent if he couldn’t get a deal with Xi.
China has already slapped tariffs on $110 billion in U.S. goods.
Under the agreement reached in Buenos Aires, the two countries have 90 days to resolve their differences over Beijing’s tech policies. If they can’t, the U.S. tariff increases will go into effect on the $200 billion in Chinese imports.
U.S. officials insist that the American economy is more resilient to the tumult than China’s, but they remain anxious about the economic effects of a prolonged showdown — as Trump has made economic growth the benchmark by which he wants his administration judged.