Business

Trump extends China tariff deadline after 'substantial' progress

Bloomberg

U.S. President Donald Trump said he’ll extend a deadline to raise tariffs on Chinese goods beyond this week, citing “substantial progress” in the latest round of trade talks that wrapped up Sunday in Washington.

“The U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues,” Trump said in a Twitter posting on Sunday evening. “As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1.”

If the sides make further headway in negotiations, Trump said he and Xi planned to meet at his Mar-a-Lago resort in Florida to conclude an agreement, though he didn’t offer any details on the timing of the meeting or how long he expects the tariff extension to last.

“Substantial” progress was made on “specific issues” as the latest round of trade talks concluded, China’s official Xinhua News Agency reported, without giving more details.

U.S. stock futures climbed in Asian trading Monday following the news, while the offshore yuan extended gains and the yen — which typically weakens when investors’ appetite for risk grows — edged lower.

The latest U.S.-China trade meeting was supposed to end Friday, but China’s Vice Premier Liu He extended his visit to Washington into the weekend. Treasury Secretary Steven Mnuchin said on Friday that a leaders’ meeting at Mar-a-Lago is being tentatively planned for late March.

The U.S. Trade Representative’s office plans to issue a formal order this week to delay the rise in tariffs.

Pushing back the March 1 deadline to more than double U.S. tariffs on more than $200 billion of Chinese goods will help soothe investor worries that a ratcheting-up of the trade war would derail a global economic expansion that’s already showing signs of softening.

The latest round of negotiations produced an agreement on a currency provision, according to Mnuchin, who didn’t elaborate on its details. It was learned earlier that the U.S. was asking China to keep the value of the yuan stable to neutralize any effort to soften the blow of U.S. tariffs.

Still, the negotiating teams hadn’t struck a deal as of late Saturday on how to monitor the currency pact. The Trump administration has said it will insist to strong enforcement measures as part of any trade deal after complaining that Beijing failed to act on past reform pledges.

During the latest round of talks, the sides continued to put their commitments in writing. The documents, which cover issues like U.S. accusations that foreign companies are forced to transfer their technology in China and alleged intellectual property theft will eventually be merged into a single agreement for the presidents’ final approval, according to a person familiar with the talks.

The person said a draft agreement on China’s technology transfer policies — one of the toughest issues — took shape over the course of the week.

The two sides have been holding rounds of talks in Washington and Beijing in recent weeks to forge a deal envisioned by Trump and Xi during a Dec. 1 dinner in Buenos Aires. The leaders agreed at the time to hold off on escalating the trade war for 90 days while their administrations sought common ground on issues ranging from intellectual-property theft to soybean purchases.

China offered to buy an additional 10 million metric tons of American soybeans during the most recent talks, U.S. Agriculture Secretary Sonny Perdue said on Twitter on Friday.

Uncertainty posed by the trade war has taken a toll on both economies and caused some turmoil in financial markets.

Chinese exports have suffered a weak patch amid the dispute, representing a drag on growth with shipments to the U.S. falling for two straight months through January. But U.S. exports to China have suffered as well, and the U.S. Federal Reserve said Friday that net exports would detract from last year’s economic expansion.

Gross domestic product will expand at a slower pace this year in both countries, according to analysts surveyed by Bloomberg.

That pessimism contributed to a plunge in global equities at year-end, though markets have since recovered partly on optimism that the trade tensions will cool. After suffering its worst December since the Great Depression, the S&P 500 Index rebounded almost 8 percent in January and is up about 3 percent this month. The Shanghai Composite Index of Chinese equities plunged 25 percent last year, recouping about 12 percent in 2019.