US foregoes China tariff hike
US president Donald Trump is calling a temporary truce in his trade war with China following talks with Chinese president Xi Jinping on the sidelines of the G20 summit in Buenos Aires, Argentina.
The US will not proceed with a threatened increase in the tariff rate on $200bn/yr of Chinese imports to 25pc for at least 90 days. That higher rate was scheduled to take effect on 1 January. Instead, the US will leave the tariff rate at 10pc that it began to enforce on 24 September while Washington and Beijing continue their negotiations.
The US decision means that China will not reciprocate by imposing higher tariffs on US LNG imports. The compromise also allows US crude to continue to be imported into China duty-free.
US energy industry leaders were hoping the first face-to-face meeting between the two leaders since Washington launched the trade war would ease tensions or at least prevent the conflict from escalating.
The US administration has been demanding sweeping changes to Beijing's economic and strategic policies that leave little room for compromise.
But the White House today said China has agreed to purchase "a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial and other product" from the US to reduce the trade imbalance between the two countries.
Trump rejected a similar compromise in May but now appears satisfied with the tariff measures already in place.
Altogether, the existing US tariffs affect about half of the $506bn/yr in imports from China. Reciprocal tariffs imposed by Beijing cover 85pc of the $130bn/yr of China's imports from the US, including most energy commodities.
The White House said Trump and Xi will continue talks on broader changes to China's policies.
"Both parties agree that they will endeavor to have this transaction completed within the next 90 days," the White House said. "If at the end of this period of time, the parties are unable to reach an agreement, the 10pc tariffs will be raised to 25pc."
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