US, China agree not to raise tariffs on Chinese goods

US, China agree not to raise tariffs on Chinese goods

US, China agree not to raise tariffs on Chinese goods

Australian shares have surged at the start of the new trading week, with energy and materials stocks up by more than two per cent in the wake of a 90-day truce on tariffs between China and the US.

The White House in turn did not immediately elaborate on any details of the meeting, besides economic adviser Larry Kudlow telling reporters that the dinner went "very well". His reflections on the meeting suggest that, at least at the leaders' level, the US-China relationship is in a better place than it was in October, following US Vice President Mike Pence's speech criticising a wide array of Chinese actions.

So far, China's actions in this regard have been fully recognized by the global community including the United States. China will be opening up.

The limited bargain, reached with Chinese President Xi Jinping over dinner, will see the US and China restart talks aimed at resolving a trade dispute that is damaging the global economy, worrying some of Trump's Republican allies, and unnerving investors. Aboard Air Force One, the president told reporters that he would formally terminate the 24-year-old North American Free Trade Agreement in a political gamble created to force wavering lawmakers to back his replacement treaty dubbed the United States-Mexico-Canada Agreement, or USMCA.

Ahead of the G-20, the US planned to increase tariffs on $200 billion in Chinese goods from 10% to 25%, effective January 1. Both sides have raised tariffs on billions of dollars of each country's goods.

Experts said that the important meeting sends a positive signal in the development of China-U.S. relations, one of the most important bilateral ties in the world.

The closely watched encounter came shortly after the Group of 20 industrialized nations backed an overhaul of the global body that regulates worldwide trade disputes, marking a victory for Trump, a sharp critic of the organization.

"Trump knew that if he insisted on China giving up the 2025 plan, it would mean the breakdown of Sino-US trade negotiations", Beijing-based consultant Hua said.

Trump has already imposed tariffs on $250 billion on Chinese products.

It was the first meeting between Xi and Trump since the USA president paid a state visit to China in November previous year. The world's two biggest economies have also increasingly been at odds over security in the Asia-Pacific region.

At Trump's request, China agreed to label fentanyl a controlled substance due to its contribution to the U.S. opioid crisis.

Xi also agreed to designate the drug fentanyl as a controlled substance, the White House said.

China "is open to approving the previously unapproved" deal for USA company Qualcomm Inc (QCOM.O) to acquire Netherlands-based NXP Semiconductors (NXPI.O) "should it again be presented".

President Trump stated: "This was an wonderful and productive meeting with unlimited possibilities for both the United States and China".

In a White House readout of a dinner at the G-20 summit in Argentina, Xi and Trump discussed a range of nettlesome issues - among them the trade dispute that has left over $200 billion worth of goods hanging in the balance. There was no mention of that threat in the White House account of Saturday's talks.

But they say the deal must do more to protect US workers from low-wage Mexican competition.

Kudlow added that if the USA doesn't get "satisfactory" responses to its trade positions more tariffs will be imposed. China calls the United States protectionist and has resisted what it views as attempts to intimidate it.

China's Vice Commerce Minister Wang Shouwen said that China and the U.S. also decided not to impose new tariffs on other products.

Sun Zhe, co-director of the China Initiative at Columbia University, said China might have made greater concessions this time but may be looking for more out of the United States in the coming months. The European Union is also pushing for sweeping changes to how the WTO operates.

Although Trump hailed the deal as "incredible", analysts have pointed out that China actually compromised little.

A senior U.S. official told Reuters that it was the first time that the G20 had recognised that the WTO was "currently falling short of meeting its objectives" and needed reform.

Market reaction to the U.S. G20 summit host Argentina is expected to sign a series of deals with China on Sunday during a one-day state visit by Xi.

Trump also held "informal conversations" with Russian President Vladimir Putin and other leaders on the sidelines of the G20 summit on Friday night.

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