President Donald Trump and his Chinese counterpart Xi Jinping said they made progress in trade talks this week and they’ll continue to push towards a deal, though the White House cautioned that “much work remains’’ to avoid another escalation of tariffs after March 1.
“It’s going extremely well,” Trump said, referring to two days of high-level trade negotiations that wrapped up yesterday in Beijing. “The tariffs are hurting China very badly, they don’t want them. And frankly if we can make the deal it would be my honour to remove them, but otherwise” many billions of dollars are pouring into Treasury from the tariffs, the president said at the White House yesterday.
President Xi Jinping said the week-long round of meetings “achieved important progress in another step,” according to China’s Xinhua News Agency.
Earlier yesterday, the White House released a statement saying that “these detailed and intensive discussions led to progress between the two parties. Much work remains, however.”
Investors applauded signs that the trade war between the world’s two largest economies isn’t escalating.
US equities surged, with the S&P 500 Index rising 0.9% by 11:05am in New York.
Both sides agreed to resume discussions in Washington next week as they work towards a “memorandum of understanding” that could form the basis of a deal between Trump and Xi. A summit meeting between the leaders hasn’t yet been scheduled.
In his statement, Xi said China was “willing to solve the bilateral economic disputes and frictions through co-operation, and push for an agreement that both sides can accept. But cooperation has principles.”
The Chinese side added that they “reached consensus in principle on major issues,” without providing further details, according to Xinhua.
The US has set a deadline of March 1 to ratchet up tariffs on $200bn of Chinese goods to 25% from 10%. Earlier this week, Trump said he’s open to extending that deadline for higher tariffs if the two sides are close to striking a deal. Bloomberg News reported that Trump is considering a 60-day extension for negotiations.
Chinese officials had initially proposed an extension of 90 days, but that was knocked back by the US side, people familiar with that request said. The White House statement said the Americans focused on structural issues in the Chinese economy “including forced technology transfer, intellectual property rights, cyber theft, agriculture, services, non-tariff barriers, and currency.”
Treasury Secretary Steven Mnuchin sounded a positive note yesterday in Beijing, saying he and US Trade Representative Robert Lighthizer held productive meetings with China’s Vice Premier Liu He. Xi also met Mnuchin and Lighthizer yesterday.
The two sides remained far apart this week on structural reforms to China’s economy that the US has requested, according to three US and Chinese officials who asked not to be identified because the talks were private. They said it would likely take a meeting between Xi and Trump to seal a deal.
Asked on Thursday if the Trump administration was considering extending the deadline for tariff increases, White House economic adviser Larry Kudlow said no decision had been made.
China wants to have the tariffs that have been imposed so far removed. To get the US to do that, negotiators are trying to focus attention on their efforts to reduce China’s more than $300bn goods trade surplus. Beijing has offered to ramp up its purchases from the US massively over the next six years in order to even the scales.
It is going to take a lot of work to shrink that. While down from the record peak late last year, China still had a $27.3bn trade surplus in goods with the US in January, according to data released on Thursday in Beijing.
“The outcome of the China-US high-level economic and trade negotiations may be related to the future development and stability of the world economy,” Chinese Foreign Ministry spokeswoman Hua Chunying said at a regular briefing in Beijing last week.
“Both parties hope to reach a mutually beneficial agreement. The best thing we can do now is to let both sides concentrate on consultations.”
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