US and China Agree Not to Impose New Tariffs from 1st January

A commitment that does not stop the dispute but gains time. China and the United States have reached an agreement this Saturday not to impose new tariffs from January 1. The president of the Asian giant, Xi Jinping, and the one of the North American power, Donald Trump, have committed themselves to continue the negotiations to look for a solution to the commercial war between the two greater world-wide economic blocks, according to have informed the Chinese state media and the White House. But the commitment is strictly temporary -90 days- and does not include any measure of the foundation.

The agreement was reached in a meeting of two and a half hours that the two leaders held in Buenos Aires after the closure of the G20 summit and has become the only news of draft of the last day of the meeting Buenos Aires. Until the announcement, they painted coarse on the commercial flank of the summit in the document of conclusions of the meeting of heads of State and Government of the 20 largest economies on the planet, the leaders had recognized the world’s “problems of trade” and they had abstained -at the will of the United States- from condemning protectionism, one of the hallmarks of the Trump Administration. The text also recognized that multilateral trade had “failed in its objectives” .

It reported that the meeting between Trump and Argentine President Mauricio Macri had focused on “predatory Chinese economic activity.” It had been in a brief statement signed by Trump’s spokeswoman, Sarah Sanders. But the word “predatory” (” predatory Chinese economic activity “, was the complete textual in English) fell like a bomb in the host country, which hoped that Buenos Aires would be the chosen place for both countries to sign the pipe of peace or that, at least, they separated their differences. In the end it ended up being like that thanks to the last minute bilateral meeting.

Speaking to the media in the Argentine capital, Chinese Vice Minister of Commerce Wang Shouwen said that the existing tariffs will continue at 10%, and tariffs will not be imposed on new products. Both parties will continue negotiations to find a solution that allows these charges to be withdrawn. If by then they have not been able to find a consensus, tariffs will rise to 25%, the tariff that was expected to take effect from January 1.

In a statement, the White House confirmed the truce agreement. According to Washington, Beijing will buy “an amount not yet decided, but very substantial, of agricultural, energy, industrial and other products to the United States to reduce the trade imbalance between our two countries.”

In the case of agricultural products -one of the objectives pursued by the American power-, purchases will begin immediately. Trump and Xi, according to the White House, “have agreed to immediately begin negotiations on structural changes with respect to the forced transfer of technology, protection of intellectual property, non-tariff barriers, piracy and computer intrusions, services and agriculture.”

The objective is that these negotiations have managed to close an agreement within 90 days. “If at the end of this period the parties are unable to reach a pact, the rates that are 10% will go up to 25%,” confirms the US statement. Before the meeting with Xi in Buenos Aires, Trump threatened to rise to 25% on January 1 the tariffs of 10% that now imposes USA on 200,000 million dollars of Chinese products. That step worried not only in China but throughout the world: it would have been a giant step, with incalculable consequences in the escalation between the two greatest powers of the globe. Financial markets should breathe a little easier next Monday.

Included in the talks between Xi and Trump, the White House has revealed, there is an agreement whereby China, “in a wonderful humanitarian gesture,” will designate fentanyl as a controlled substance and will punish “with the greatest pain according to the law “to those who sell this substance to the United States. Fentanyl is an analgesic between 50 and 100 times more potent than morphine, whose use has been linked to the growth of deaths from opioid overdoses in the United States. This substance enters that country mainly because of the traffic of mafia groups in China and Mexico.

Chinese Foreign Minister Wang Yi confirmed in a press conference that Beijing has agreed to buy more US goods to try to reduce the imbalance in the trade balance. The minister described the conversation between Xi and Trump as “friendly and sincere.” Both, according to Wang, agreed that China and the US “can and should” guarantee the success of their relations.

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