Trump and Xi serve up trade war truce comfort food

TRADE WAR: Europe and Asia stock markets higher as China and US agree CEASEFIRE

China and US declare temporary truce after Trump, Xi summit

At the G20 summit, Donald Trump and Xi Jinping agreed to halt new trade tariffs for 90 days to allow for talks.

In a meeting lasting two and a half hours, the United States agreed not to raise tariffs further on January 1, while China agreed to purchase more agricultural products from USA farmers immediately.

China has agreed to "reduce and remove" the 40-percent tariff it slaps on new cars imported from the United States, president Donald Trump wrote in a Twitter post.

"However, I will say this: President Xi has never been this involved".

After 90 days, if there's no progress on structural reform, the US will raise those tariffs to 25 percent, White House Press Secretary Sarah Huckabee Sanders said in a statement.

Beijing cut import duties on foreign autos to 15 percent in July but added a 25 percent penalty for US -made vehicles the following month in response to Trump's tariff hikes.

Resolving the tariff war between the US and China is seen as crucial for American agriculture, particularly soybeans, America's largest export to China, which accounted for $12.4 billion in sales past year.

Neither country had mentioned the issue in their official read-outs of the Trump-Xi meeting which focused on a USA agreement not to raise tariffs further on 1 January, while China agreed to purchase more agricultural products from USA farmers immediately.

"Mnuchin said China had agreed to make "big, long-term commitments" to purchase USA liquefied natural gas", provided that the United States builds sufficient export terminals. "It is my great honour to be working with President Xi".

The tariffs stem from the Trump administration's demands that China make sweeping changes to its intellectual property practices.

According to a statement from the White House, China will purchase a "very substantial" amount of agricultural, energy, industrial, and other products to reduce the bilateral trade imbalance.

The US president did not send any subsequent tweets on Sunday explaining which auto tariffs would be removed, and which would be reduced.

Initial reaction to the 90-day truce buoyed major Asian markets after the weekend break.

His comments were borne out by figures released on Monday showing that China's factory activity grew slightly in November, though new export orders extended their decline in a further blow to the sector already hurt by trade frictions.

"Trump's latest tweets this morning, which touted the benefits of the agreement for USA farmers and his own prowess as a dealmaker, suggest he will be reluctant to walk away from negotiations for a second time", he said.

Financial markets surged on the news of the ceasefire, with the benchmark Dow Jones Industrial Average up 1.2 percent, more than 300 points, about 30 minutes after the open, relieved that some of the immediate threat of further damage was averted.

The White House announced it wouldn't raise the 10 percent tariffs to 25 percent, instead giving the two countries 90 days to talk out their problems. First off, China and the USA have a lot of disagreements, and three months is not a lot of time to solve them - especially since the two countries have been at it for over a year.

The price increase sparked a major hit to the roughly $10 billion worth of passenger vehicles the United States sent to China previous year.

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