Corrects timeline for end of trade truce after White House clarification
The US administration wants to move quickly to put in writing trade commitments it says Beijing agreed to during the 1 December meeting between US president Donald Trump and Chinese president Xi Jinping.
But the two sides do not appear to be on the same page as to the scope and timing of the deal, which emerged during discussions at the G20 summit in Buenos Aires, Argentina.
"The China changes with respect to tariffs and non-tariff barriers and other structural issues would begin immediately," White House chief economic adviser Larry Kudlow said today. "It will include things like car tariffs and various transactions in agriculture industry, energy and so forth."
Kudlow said, for instance, that Beijing agreed to cut tariffs on US-made cars to zero, from 40pc, citing his conversations with Chinese vice premier Liu He in the run up to the Trump-Xi meeting.
The US meanwhile said it would not proceed with a threatened increase in the tariff rate on $200bn/yr of Chinese imports to 25pc until at least 1 March, instead of on 1 January. Those imports now face a 10pc tariff.
But Beijing's readout of the meeting makes no reference to a 90-day deadline for a deal and does not contain any specific pledge to import more energy products from the US. It also does not mention a deal to reduce auto tariffs.
US business and agricultural groups nevertheless hailed the news of the temporary truce in the US-China trade war, which also helped to support a rally in US equity markets. US ethanol prices also firmed early Monday.
An energy market insider involved in US-China trade said that Beijing was considering eliminating tariffs on coal, LNG, petrochemicals and other energy products that it imposed earlier this year in response to US tariffs. US LNG imports into China are taxed at 10pc. China has refrained from imposing duties on US crude, but uncertainty put US crude exports to China on hold in August-October.
But Beijing says that Trump and Xi merely agreed to stop levying additional tariffs and instructed their negotiating teams "to step up consultations in the direction of lifting all additional tariffs and strive to reach a mutually beneficial and concrete agreement as soon as possible."
Treasury secretary Steven Mnuchin said today the US negotiating team will include representatives from the departments of Agriculture and Energy.
"There was a very specific understanding and now it is the team's job to turn this into a real agreement that will have deliverables, terms and real commitments," Mnuchin said in a televised interview. US trade representative Robert Lighthizer will lead the follow up negotiations.
Beijing in May already gave informal guarantees for increasing imports of energy and agricultural commodities from the US. Mnuchin, who led the negotiating team with China in May, said at that time the US was hoping to boost exports of oil, LNG and other energy commodities to China to $50bn-$60bn/yr from about $8bn last year.
But Trump rejected that proposal, proceeding with tariffs in three rounds that now 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.
Trump justified the tariffs by backing White House trade adviser Peter Navarro's call for sweeping changes to Beijing's economic and strategic policies.
"This structural issue is the most important thing, to prevent China from doing all sort of economic aggression," Navarro said today.
Navarro said that Xi presented responses to each of the 142 specific demands Washington has made on the bilateral trade. "It is going to require changing and enforcing their laws and telling the hundreds of people inside their government to stand down."
Kudlow said negotiations with Liu already reached "close to an agreement" on some salient points for Washington, including protection of intellectual property rights and stopping forced transfers of technology to China.
