US-China Trade Battle Hits Global GDP as Negative for 2-3 Years
United States and China have agreed to resume trade talks - Photo by GettyImages

JAKARTA (TheInsiderStories) – World’ two largest economies United States (US) and China have agreed to resume trade talks. Donald Trump announced, he would hold off imposing an additional US$300 billion in tariffs at the high level meeting with Xi Jinping at the sidelines Group of 20 (G-20) summit in Osaka, Japan, on Saturday (06/29).

Tweeting from South Korea after the two-day leaders meeting, the US president said he wanted to ensure Washington secured a good trade deal with China and would not sacrifice that outcome for the sake of speed.

“The quality of the transaction is far more important to me than speed. I am in no hurry, but things look very good,” Trump wrote on his Twitter account.

Trump and Xi agreed to resume trade talks after the American president pledged not to put more tariffs on Chinese goods while negotiations continued. He also would delay restrictions against Huawei Technologies Co., letting US companies resume sales to China’s largest telecommunications equipment maker.

Trump later tweeted that his meeting with Xi was “far better than expected”. Then he tweeted: “I had a great meeting with President Xi of China yesterday, far better than expected. I agreed not to increase the already existing Tariffs that we charge China while we continue to negotiate. China has agreed that, during the negotiation, they will begin purchasing large amounts of agricultural product from our great Farmers.”

The White House released no details about the arrangement worked out by the two leaders. The president’s comments may remove an immediate threat from a trade war looming over the global economy even as a lasting peace remains elusive.

After Trump and Xi met at the G-20, the two governments plan to restart trade talks that broke down last month. As part of the arrangement, the president said Xi promised to buy “tremendous” amounts of US agricultural products, but Chinese official media reports said only that Trump hopes China will import more American goods as part of the truce.

“At the request of our High Tech companies, and President Xi, I agreed to allow Chinese company Huawei to buy a product from them which will not impact our National Security. Importantly, we have opened up negotiations again with China as our relationship with them continues to be a very good one,” he tweeted.

The truce came after the two leaders have what Trump called an “excellent” meeting in Osaka. He said he had agreed not to target Chinese exports with new tariffs, while China had agreed to buy US agricultural goods.

“We’re holding back on tariffs, and they’re going to buy farm products,” Trump said at a news conference as AP reported. If we make a deal, it will be a very historic event, he adds.

In an apparent concession to China, Trump said US companies could continue to sell products to Huawei, which the country has targeted over concerns that the Shenzhen-based company could help China conduct electronic spying.

Earlier this year, Trump effectively banned US companies from selling products to technology company, by putting the Chinese group on the so-called entity list — a move that means US companies have to apply for licenses to sell software or equipment.

However, Trump stressed that he had made clear to Xi that he was not willing to discuss broader issues about Huawei until much later in the trade negotiations. Trump said he was not in a rush to secure a deal and that he would rather be patient and get the best deal.

The US – China trade truce follows a similar pattern to last year when Trump and Xi met at the G20 summit in Buenos Aires, Argentine against a backdrop of tit-for-tat tariffs on hundreds of billions of dollars of Chinese and American exports.

US and Chinese officials have been negotiating for months in an effort to resolve the trade war, but the talks collapsed in early May, sparking concern among US companies which argue that the tariffs are taking a toll on American consumers. Still, it’s unclear whether they can overcome differences that led to the collapse of a previous truce reached at the G20 in November.

Trade was the central focus of the Osaka’ G20, with Xi accusing rich countries of engaging in protectionism that was “destroying the global trade order”. Alongside the US – China trade detente, the mood was lifted by the EU and Mercosur striking a landmark trade agreement that was 20 years in the making.

In remarks to African leaders, Xi took a not-so-subtle swipe at Trump’ “America first” trade policy, warning against “bullying practices” and adding that “any attempt to put one’s own interests first and undermine others’ will not win any popularity.”

Xi also called out the US over Huawei and said the G20 should uphold the “completeness and vitality of global supply chains”. China insisted this week that Huawei must be removed from the blacklist under any deal.

Trump and top officials in his administration alleged that Beijing had reneged on provisions of a tentative trade deal. It’s not clear if Xi agreed to return to previous agreements as part of the new truce.

The US president said he had not yet decided how to allow American companies to continue selling to Huawei or whether to remove the tech giant from the Commerce Department’s entity list. He said he would meet with advisers next week to determine how to proceed.

It was not clear how long the exemption would last. Trump said he had agreed with Xi to wait until the very end of trade talks to resolve broader issues around Huawei, including Washington’s lobbying campaign against allies buying its 5G equipment.

The move is likely to draw criticism in Washington where national security hawks have urged Trump not to ease any pressure against Huawei. The company has long been the target of concern at the Pentagon and intelligence agencies in part over what the US claims are its close ties to the Chinese military.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

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