At a dinner after the G20 summit in Buenos Aires, US President Donald Trump and Chinese leader Xi Jinping agreed to forego the threat of new punitive tariffs for the time being. At the same time, the US issued an ultimatum to China: If Beijing does not comply with the demands for a reduction in trade barriers within 90 days, the punitive tariffs should rise as planned.
Trump has recently threatened to raise the current punitive tariffs of ten percent on Chinese imports to the tune of $ 200 billion at the beginning of the year to 25 percent. After the highly anticipated meeting of Trump and Xi, the White House announced that it would suspend the new punitive tariff for 90 days. Both sides rated the meeting as „highly successful“.
„In principle,“ the agreement had prevented „an expansion of economic tensions between the two countries“ and „opened up new space for a win-win cooperation,“ said China’s Foreign Minister Wang Yi after the meeting.
Punitive duties already imposed remain in force
Already at the beginning of the meeting with Xi, Trump had been confident that both sides would succeed in achieving „something good for China and the United States.“ Xi said both sides shared the great responsibility of finding a solution to their dispute.
Although both sides now agree on a provisional suspension of further punitive tariffs, already imposed punitive tariffs remain in force: Chinese imports worth about 50 billion dollars are already subject to customs duties of 25 percent, on further goods worth 200 billion dollars punitive tariffs of ten percent. China responded with tariffs on US goods worth $ 110 billion.
The White House made clear that the increase in the current punitive tariffs would be carried out from ten to 25 percent if China did not meet US demands within 90 days. Among other things, the US demands that China dismantle a number of trade barriers and stop the theft of intellectual property. Washington accuses Beijing of making fair trade impossible.
Trump was optimistic despite the impending tough negotiations: „This was an incredible and productive meeting with unlimited opportunities for both the United States and China,“ he said. „It is a great honor for me to work with President Xi.“
Observers reacted differently
The meeting between Trump and Xi was considered important for a rapprochement of the two countries in the escalating trade crisis threatening the global economy.
Chancellor Angela Merkel (CDU) had expressed in Buenos Aires the hope that the meeting between Trump and Xi bring „solutions“. „All of us, we realize, are indirectly affected by this, if Sino-US economic relations do not run as smoothly as a world order needs,“ Merkel said. The Chancellor had met with both Trump and Xi on the sidelines of the G20 summit.
Observers reacted differently to the outcome of the meeting between Trump and Xi. The Beijing political advisor Hua Po pointed out that Trump was a „lame duck“ after the interim elections to the congress. China was therefore easier to make concessions. According to Brad Setser, a former US Treasury official, most of the work to resolve the dispute is still to come.