China & US agree to temporarily cease trade hostilities before G20 summit, sources say
The world’s two largest economies, the US and China, have agreed to a tentative truce in their trade war in order to resume talks aimed at resolving the conflict, sources told the South China Morning Post.
According to three sources (one in Beijing and two in Washington), details of the agreement are being defined in press releases in advance of the two countries’ leaders meeting at the Group of 20 summit in Osaka, Japan this weekend.
One source with knowledge of the planning said US President Donald Trump’s decision to delay additional tariffs was President Xi Jinping’s price for holding the meeting in Osaka.
“The reality, though, is President Trump could always have a change of heart,” the source said. “But the truce cake seems to have been baked.”
A Washington-based source familiar with the talks said there are “ongoing attempts to coordinate press messaging.” The source noted there was no specificity yet regarding decisions on tariffs or timing within that messaging.
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A US-China agreement on trade could prevent the next round of tariffs on an additional $300 billion of Chinese imports. The Trump administration has threatened to place duties of up to 25 percent on the remaining untaxed Chinese goods if the summit talks go poorly. That would mean almost everything that China sells to the United States would be subject to tariffs.
Such a move by Washington would provoke a retaliation from Beijing, which could include imposing additional tariffs on American goods and restrictions on key exports such as rare earth materials, which are critical for the US. The escalating trade war between the world’s two biggest economies could trigger a global financial crisis.
Trump said on Wednesday he is prepared to introduce additional tariffs on China if the talks in Osaka fail. However, he suggested that additional duties could start at 10 percent.
Since the beginning of the trade war nearly a year ago, Trump has imposed 25-percent tariffs on $250 billion worth of Chinese goods. As tensions continued to spiral, in May, Washington imposed 25-percent tariffs to a number of Chinese imports after slapping Beijing with higher levies on $200 billion worth of products. Beijing hit back with increased tariffs on more than 5,000 American products worth $60 billion.
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