Donald Trump cheers China’s trade concessions
President Trump on Monday heralded big concessions from China to lower auto tariffs and other trade barriers, as Wall Street rallied on the breakthrough that put a trade war on hold.
Mr. Trump proclaimed that relations with China took a “big leap forward,” and top White House economic advisers were guardedly optimistic that the two economic superpowers were on course for a major trade deal.
Investors, who had been spooked by months of escalating trade conflict, went on a buying binge to celebrate news that the U.S. and China called a 90-day truce to iron out a deal.
The Dow Jones Industrial Average shot up 287 points or 1.13 percent to close at 25,862. The SP 500 climbed 30 points or 1 percent, to end the day’s trading at 2,790 and the Nasdaq soared 110 points, or 1.51 percent, to close at 7,441.
“We’re going to have to see what happens over these 90 days,” Tom Martin, senior portfolio manager at Globalt Investments, told The Associated Press. “In the meantime, you’re not getting an increase in the tariffs, so that’s an interim positive.”
At a dinner meeting Saturday at the Group of 20 summit in Buenos Aires, Mr. Trump and Chinese President Xi Jinping made the breakthrough. The U.S. agreed to delay a planned Jan. 1 tariff increases for 90 days and China agreed to open its markets and buy more American goods.
Mr. Trump predicted Beijing would move quickly, including buying more American agriculture products and slashing its 40 percent tariff on automobiles.
“Farmers will be a a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!” Mr. Trump tweeted.
The reaction was more subdued in China, where state-run media focused on the pause in tariffs rather than concessions by Mr. Xi, who enjoys immense power but must be cautious of criticism from within the ruling Chinese Communist Party that he is capitulating to the U.S.
Both sides appeared eager to move quickly, and Beijing prepared to send about 30 officials to Washington for trade talks, according to The South China Morning Post.
“As the next step, both sides will speed up negotiations based on the consensus reached between the two countries’ leaders,” said Chinese foreign ministry spokesman Geng Shuang.
Mr. Trump tapped China hawk Robert E. Lighthizer, the U.S. trade representative, as the U.S. point man in the trade talks.
“He’s the toughest negotiator we’ve ever at the USTR and he’s going to go chapter and verse and get tariffs down, nontariff barriers down and end all these structural practices that prevent market access,” White House trade adviser Peter Navarro said in an interview on National Public Radio.
Treasury Secretary Steven T. Mnuchin, who is closer to the U.S. financial sector and viewed as less aggressive on China, previously had been leading the negotiations. But White House officials said he will continue to be deeply involved, especially on financial and currency issues.
Larry Kudlow, the director of the president’s National Economic Council, said the Chinese made major new commitments and “put stuff on the table that we have not seen before.”
Those commitments included addressing Beijing’s theft of intellectual property and forced transfer of technology from American companies doing business in China, issues that top Mr. Trump’s list of demands.
Mr. Kudlow also said that the discussions at the dinner led him to believe Beijing would reduce the tariffs on autos all the way to zero, noting that they committed to “immediate” action on a range of issues.
He stressed that China has reneged on promised before but that Mr. Xi’s personal involvement and close relationship with Mr. Trump signaled that this time could be different.
Earlier this year, Mr. Xi followed through on a promise to reduce auto tariffs, cutting them to 15 percent from 25 percent. But he then retaliated against Mr. Trump’s tariffs by raising them to 40 percent.
“So we’ll see. But I can tell you I’ve never seen that ‘immediately’ commitment before,” Mr. Kudlow said.
China on Monday did not lower tariffs or announce pending action.
Mr. Trump’s get tough tariff policy, although fiercely criticized by free-trade advocates in his own Republican Party, forced China to the negotiating table.
A 10 percent tariff on $200 billion of Chinese goods was set to increase Jan. 1 to 25 percent. Mr. Trump threatened to slap duties on another $267 billion of goods, essentially taxing all Chinese goods brought to the U.S.
The truce set a new April deadline for a trade agreement before the tariff increase to 25 percent takes effect.