USA wants 'concrete' trade action from China within 90 days

Jeannie Matthews
December 5, 2018

In dealing with China so far, Trump has lived up to his self-ascribed reputation as a "tariff man". In doing so, he spread confusion and sent the stock market tumbling while essentially threatening a trade war against China over what his administration perceives as trade abuses.

As it was presented by Trump on Saturday, he and Xi had agreed that, in return for the USA deferring a foreshadowed increase in the rate of tariffs on $US200 billion of Chinese exports to the United States for 90 days, China would agree to purchase "very substantial" amounts of U.S. products "immediately".

Asked why the auto tariffs weren't mentioned in statements the USA and China issued after the dinner, Kudlow inexplicably insisted that they were. "I'm taking President Xi at his word, at his commitment to President Trump. It will always be the best way to max out our economic power", he said. If talks fail, the tariff rate on $200 billion of the original $253 billion worth of goods will be hiked from 10 percent to 25 percent.

Since a great deal of social media simply cannot look away from these tweets, you can guess what happened next.

Trump nevertheless praised himself for the dinner, and abandoned nuance in claiming on Twitter that China had agreed to immediately buy more US farm products, in addition to dropping auto tariffs. Chuck Grassley (R-Iowa), chairman of the Senate Finance Committee, has suggested to Axios that he would support legislation that limits the president's ability to impose tariffs. "Bob Lighthizer will be working closely with Steve Mnuchin, Larry Kudlow, Wilbur Ross and Peter Navarro on seeing whether or not a REAL deal with China is actually possible". There, all sides agree, the American president agreed to postpone an increase in tariffs on Chinese imports to 25 percent from 10 percent, which was scheduled to take effect January 1, in exchange for negotiations on broader economic disputes. The Chinese have not acknowledged a 90-day deadline for the talks or said that they plan to "immediately" increase purchases of United States farm goods. Even before the Buenos Aires talks, Trump last month had stated incorrectly that the Chinese government "got rid of" the Made-in-China 2025 programme of subsidised technology development in response to his objections.

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The dollar has gone through a number of dips recently as an increasing number of countries, namely Russia, China and Turkey, have voiced calls to shift more decisively to national currencies in global trade, and even clinched deals to this end, in retaliation to the US' across-the-board tariff plan.

While stocks had already given up a significant amount of their post-G20 gains, the tweets appeared to confirm investors fear that the Trump deal may not have been as solid as it first seemed and trade-war dangers still loomed.

Mr. Trump told supporters on Twitter that he will "happily sign" any deal with China that he considers fair. Let the negotiations begin. As part of his Twitter storm today, the U.S. president called himself "Tariff Man" and then proceeded to demonstrate his lack of basic understanding about how tariffs work, seemingly ignorant of the fact that tariffs are in effect a tax paid by domestic consumers, not foreign countries.

The two leaders said they would hold off on imposing additional tariffs for 90 days starting December 1 while they seek a solution to their trade disputes. "This agreement is a short-term alleviation of trade tensions, but we caution that this is a reprieve rather than a resolution".

"Mr. Trump has famously boasted that trade wars are 'easy to win, ' but he is now 0-for-2 on that count", they wrote.

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