A lasting truce in the “trade war”?
In the midst of the clash between President Trump and Speaker Nancy Pelosi and Buzzfeed rumors, trade talks between the U.S. and China have been chugging along, with an aim to reach an agreement to end the tariff dispute before the 90-day truce agreed to by President Trump and China’s Xi Jinping is set to expire.
It appears that a lasting truce may be in sight, and China may be going on a historic shopping spree.
China has offered a six-year boost in imports during its ongoing talks with the U.S., officials familiar with the matter told CNBC.
Chinese officials made the offer during negotiations in Beijing earlier in January, Bloomberg News reported. China would increase its annual import of U.S. goods by a combined value of over $1 trillion, the officials told Bloomberg, which was first to report on the import boost offer.
China pegged its proposal to buy more U.S. goods through 2024 to President Donald Trump’s hopes of being re-elected in 2020, the sources told CNBC.
American officials are now reportedly considering lifting tariffs on Chinese imports to incentivize a better trade deal.
Last year, the Trump administration announced duties on $200 billion worth of Chinese goods and threatened additional tariffs if Beijing responded. Tensions have simmered down since December when the leaders of both countries met face-to-face on the sidelines of the G20 summit in Buenos Aires, Argentina.
Last week marked the first face-to-face meetings between Chinese and American trade delegates since the G20 summit. The meetings, which went a day longer than planned, resulted in China agreeing to purchase more U.S. farm and agricultural commodities. Chinese officials have also agreed to grant wider access to mainland markets to U.S. firms.
In addition to the buying binge, American officials are pushing for regular reviews of China’s progress on pledged trade reforms as a condition of a formal trade deal.
A continuing threat of tariffs hanging over commerce between the world’s two largest economies would mean a deal would not end the risk of investing in businesses or assets that have been impacted by the trade war.
“The threat of tariffs is not going away, even if there is a deal,” said one of three sources briefed on the talks who spoke with Reuters on condition of anonymity.
Chinese negotiators were not keen on the idea of regular compliance checks, the source said, but the US proposal “didn’t derail negotiations”.
I bet they weren’t “keen on the idea of regular compliance checks”! However, the Chinese do appear to be far more reasonable during negotiations than Nancy Pelosi and Chuck Schumer.
As a bonus, stock portfolios are seeing gains.
The stock market closed higher Friday, extending its winning streak to a fourth session, on media reports that stoked hopes for progress in trade talks between the U.S. and China. Optimism over a potential bilateral deal helped to offset worries about the prolonged partial government shutdown and mixed corporate results.
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