U.S., China Agree to “Trade Truce,” Putting Additional Tariffs on Hold

With a January 1 deadline fast approaching for increased tariffs on Chinese imports, the U.S. and China announced a temporary trade truce that puts those tariffs on hold—for now. During a meeting at the G-20 summit in Argentina over the weekend, President Donald Trump and Chinese President Xi Jinping reportedly came to terms that put the high stakes trade war on pause for 90 days.

There are two key points here to understand about what this means for those $200 billion worth of Chinese imports that are already facing tariffs, as well as the next steps forward: First, those products will still face the 10 percent tariffs that have already been approved by Congress. What this truce does is prevent that 10 percent from increasing to 25 percent on January 1, which had been proposed and planned to go into effect prior to this “cease fire.”

Second, the 90 day grace period is seen as a highly critical period of time during which the two sides have agreed to work together to try to reach a deal that improves the trade relationship between the two global powers.

“President Trump and President Xi have agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture,” the White House said in a statement after Trump and Xi met on Saturday. “Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent.”

Analysts who’ve been watching the situation between the U.S. and China remain optimistic about the news of the truce, but have warned that the so-called trade war is far from over.

“The result shows the willingness of the two sides to reach a deal, although we still think finding a mutually agreeable compromise that leads to a comprehensive rollback of tariffs will be challenging,” Goldman Sachs analysts wrote in a research note Sunday, according to NBC News.

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