US foregoes China tariff hike: Update

Adds details of Chinese government reaction, President Trump's tweet on lifting of China's car import tariffs in paragraphs 11-15

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 on 1 December 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."

China has also agreed to "reduce and remove" its 40pc import tariff on cars from the US, Trump said in a tweet following the meeting. There was no immediate confirmation of this from Beijing.

The Chinese government described the meeting as "very successful", but made no reference to some of the key details in the White House statement — including the 90-day deadline and any specific pledge to raise imports of energy products from the US.

Xi and Trump reached a consensus not to impose new additional tariffs and pledged to "step up negotiations toward the removal of all additional tariffs and reach a concrete agreement", the foreign ministry said.

China will work to expand imports, open its market and resolve economic and trade issues with the US, it said.

The 90-day halt to any increase in the tariff rate applies to the $200bn/yr of US imports from China, including metals, ores and petrochemicals as well as LNG, which were hit with 10pc tariffs on 24 September. China imposed retaliatory tariffs at rates of 5-10pc on thousands of products imported from the US, including many chemicals and metals.