China Echoes Success of Trade Truce

Hello,

During the course of last weekend through today, the media, the markets, the industry and others have seen conflicting reports on the trade truce reportedly reached at Saturday’s dinner with President Trump and Xi. There was confusion over the 90 day cease-fire and when it would begin, concerns China had not committed to any concessions, and a larger concern that the truce was nothing more than a lightly confirmed possibility to continue mapping a solution in the weeks and months ahead.

However, reports from China signal that a real deal seems to be in place and a relatively clear path forward not only exists, but is being traveled. Thursday in Beijing, government officials announced they will quickly address the concerns involved in the tariff matter. The first points of focus are on farm goods, energy and automobiles. China’s Ministry of Commerce spokesman Gao Feng said China will “immediately implement the consensus reached by the two sides on farm products, cars and energy.” Additional topics include intellectual property and other non-tariff trade barriers. While many experts say that 90 days is not enough time, the Gao also went on to say “China is full of confidence in reaching an agreement within the next 90 days,” demonstrating that China is highly motivated to resolve this tariff war.

While it may not be possible to finalize a full trade agreement in 90 days, both the US and China are showing dedication to achieving an agreement expeditiously. Also, the White House has confirmed that the 90 day extension is applied from December 1, not from January 1 meaning if a deal or an extension is not reached, 25% tariff escalations would go into effect on March 1 2019.