OSAKA – President Donald Trump and Chinese President Xi Jinping agreed to a new cease-fire Saturday in a yearlong trade war during their meeting on the sidelines of the Group of 20 summit, averting, at least for now, an escalation feared by financial markets and the business community while negotiations continue.
Trump said U.S. tariffs in place against Chinese imports will remain, but that new tariffs he’s threatened to slap on billions worth of other Chinese goods will not be triggered for the “time being.” He also announced that the U.S. and China would restart stalled trade talks, saying, “we’re going to work with China where we left off.”
Trump spoke after a lengthy meeting with Xi in Osaka. The leaders had sought to find an off-ramp to a burgeoning trade war between economic powerhouses despite doubts about their willingness to compromise on a long-term solution.
Trump had said earlier that relations with China were “right back on track.
“We’ve had an excellent relationship … but we want to do something that will even it up with respect to trade,” Trump told Xi as their meeting opened.
“I actually think that we were very close and then something happened where we slipped a little bit, and now we’re getting a little bit closer. But it would be historic.”
For his part, Xi opened the meeting with a reference to the ping-pong diplomacy in the 1970s that paved the way for formal diplomatic ties between the U.S. and China.
“China and the United States both benefit from cooperation and lose from confrontation,” Xi said in prepared remarks.
After the talks, Trump said he would allow Huawei Technologies Co. to buy products from U.S. suppliers, in a concession to China.
“U.S. companies can sell their equipment to Huawei,” Trump said at a news conference following the summit. “We’re talking about equipment where there’s no great national security problem with it.”
The Commerce Department last month moved to blacklist Huawei, cutting it off from U.S. suppliers, though many companies have managed to skirt the restrictions.
The U.S. has been engaged in a global campaign to block Huawei from so-called 5G communications networks, calling the company a security threat. The Trump administration has alleged the Chinese government could use Huawei’s products to spy on countries that use them in their networks.
The company has denied that it conducts espionage for Beijing.
The apparent truce marks a pattern for talks between Trump and Xi, who have professed their friendship with each other and hit the pause button on protectionist measures after previous conversations, only to see negotiations later break down over the contentious details.
The meeting that ultimately led to the cease-fire marked the centerpiece of four days of diplomacy for Trump, whose re-election chances have been put at risk by the trade war, which has hurt American farmers and battered global markets. Tensions rose in recent weeks after negotiations collapsed last month.
The two countries have sparred over the Trump administration’s allegations that Beijing steals technology and coerces foreign companies into handing over trade secrets. China denies it engages in such practices.
Beijing, for its part, has retaliated by levying its own tariffs on goods from the United States. On Friday, it criticized what it calls “negative content” about China in legislation before the U.S. Congress, saying it would further damage relations already roiled by disputes over trade and technology.
Chinese Foreign ministry spokesman Geng Shuang said cooperation in important areas would be disrupted if the draft National Defense Authorization Act passes. The bill blocks the transfer of sensitive technology to China and prevents Chinese state companies from receiving U.S. federal funds.
Under the cease-fire scenario, existing tariffs and counter-tariffs on many of each other’s goods would remain in place. But no additional import taxes would take effect. This would buy time for U.S. and Chinese officials to restart talks that stalled last month after 11 rounds of negotiations.
Trump said Friday he had not agreed to a cease-fire with President Xi as a precondition for their meeting.
Concerns about the standoff had prompted investors to bet on easing by central banks and pile into havens. Treasury yields have tumbled to their lowest level in years.
The yen, a traditional beneficiary of flight to quality, has gained, while the U.S. dollar has slipped across the board, including against China’s yuan. Stocks have seesawed on each new twist in the trade tug-of-war.