Global Geopolitical Series: Trump-Xi consensus reached on trade but statements differ

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

After a two-and-a-half hour dinner with Chinese President Xi Jinping (習近平) on Saturday in Buenos Aires, Trump agreed to postpone an increase in the tariff rate on US$200 billion worth of Chinese imports to 25 percent from 10 percent that was scheduled for January 1.

The trade war has taken a toll on auto companies that manufacture in the USA, with the makers of Mercedes-Benz and its rival BMW both warning of lower profits this year as tariffs forced them to hike prices in China. We make the finest and cleanest product in the World, and that is what China wants.

The increases come after the U.S. and China said they had agreed to not increase tariffs for 90 days to allow for talks.

"While the Xi-Trump dinner has clearly improved the tone of the U.S".

Yet reaching a permanent peace will hardly be easy.

These sales irk China because they directly conflict with Beijing's long-standing policy that there is only one Chinese government, and Taiwan is merely a breakaway province that will inevitably be reunited with the mainland.

But the White House also said the existing 10 percent tariffs on $200 billion worth of Chinese goods would be lifted to 25 percent if no deal was reached within 90 days, once again setting the clock ticking.

According to the agreement, the United States and China will not increase or introduce new tariffs for 90 days.

The truce, agreed on Friday (30 November) by USA president Donald Trump and China's president Xi Jinping, has been welcomed by U.S. associations representing apparel and footwear brands and retailers.

The US and China have been embroiled in a trade war this year which has seen the US hit China with tariffs on $250bn (£195.9bn) worth of goods since July, and China retaliate with duties on some $110bn of US goods over the same period.

President Donald Trump said in a late-night tweet that China has agreed to "reduce and remove" tariffs on imported American-made cars, a claim that wasn't immediately confirmed by Beijing.

Chinese regulators did not respond to requests for comment on Trump's tweet on autos tariffs.

But can China be trusted?

The trade war has seen the USA and China hit each other with escalating tariffs in an attempt to make their domestically made goods more competitive. The Trump administration is "going to have to decide how much progress they need in order to define it as a win".

Parag Khanna, founder of the FutureMap consultancy and author of the forthcoming book "The Future is Asian", noted that in speeches to domestic Chinese audiences, Xi is still promoting the economic self-reliance that Made in China 2025 symbolizes.

"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.

That's because for China, Trump's trade war has never been only - or even mainly - about trade.

The president also touted an agreement with China to reduce tariffs on cars entering China from the United States.

The healthy increases paved the way for sharp rises on European and U.S. exchanges later on Monday with futures trade seeing the FTSE100 opening up by 1.6% and the Dow Jones industrial average on Wall Street expected to leap 2%.

In the meantime, just as Trump dialed back the drama on one trade front over the weekend, he magnified the tension on another.

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