Trade war US-China agree to ceasefire at G20 summit
After a little over three months, China and the US agreed to ceasefire the bitter trade war after high-stakes discussions in Argentina between President Donald Trump and Chinese premier Xi Jinping, including no escalated tariffs on 1 January 2019. Trump will not impose tariffs on US$200bn worth of Chinese imports at 10% beginning in the New Year, agreeing not to raise them to 25%.
China agreed to purchase a substantial amount of agricultural, energy, industrial, and other product from the US with an objective to reduce the trade deficit between the countries.
The two also agreed to immediately start talks on structural changes with respect to forced technology transfers, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. Both also agreed to have this ‘transaction’ completed within the next 90 days. However, if this does not happen then the 10% tariffs will be raised to 25%, reports said.
In an immediate reaction, the Euro and Australian dollar rallied against the US$, encouraging investors to sell the greenback and buy riskier assets. Crude oil prices jumped over 5% ahead of a meeting this week of the OPEC that is expected to agree to cut supply.
