The United States and China agreed on Saturday to restart trade talks and that Washington would hold off on imposing new tariffs on Chinese exports, signalling a pause in the trade hostilities between the world’s two largest economies.
The truce offered relief from a nearly year-long dispute in which the countries have slapped tariffs on billions of dollars of each other’s imports, disrupting global supply lines, roiling markets and dragging on global economic growth.
“We’re right back on track and we’ll see what happens,” U.S. President Donald Trump told reporters after an 80-minute meeting with Chinese President Xi Jinping on the sidelines of a summit of leaders of the Group of 20 (G20) major economies in Japan.
Trump said while he would not lift existing import tariffs, he would refrain from slapping new levies on an additional $300 billion worth of Chinese goods – which would have effectively extended tariffs to everything China exports to the America.
“We’re holding back on tariffs and they’re going to buy farm products,” he said at a news conference. “If we make a deal, it will be a very historic event.”
Trump said China would buy more farm products but did not provide specifics.
In a lengthy statement on the talks, China’s foreign ministry said the United States would not add new tariffs on Chinese exports and that negotiators of both countries would discuss specific issues.
Xi told Trump he hoped the United States could treat Chinese companies fairly, the statement added.
On the issues of sovereignty and respect, China must safeguard its core interests, Xi was cited as saying. “China is sincere about continuing negotiations with the United States … but negotiations should be equal and show mutual respect,” the foreign ministry quoted Xi as saying.
Trump had threatened to extend existing tariffs to almost all Chinese imports into the United States if the meeting brought no progress on wide-ranging U.S. demands for reforms.
The dispute, which includes a feud over China’s Huawei Technologies Co, had also fanned fears it could threaten global growth.
The United States has pressed its allies to shun Huawei in their fifth generation, or 5G, networks on security grounds, and has also suggested it could be a factor in a trade deal.
The Trump administration has declared Chinese telecoms giant Huawei a security threat, effectively banning U.S. companies from doing business with it.
Trump said on Saturday that he had discussed Huawei with Xi and that resolving that issue would come later, but added that U.S. companies would be able to sell components to Huawei.
Financial markets are likely to breathe a sigh of relief on news of the resumption in U.S.-China trade talks.
“Returning to negotiations is good news for the business community and breathes some much needed certainty into a slowly deteriorating relationship,” said Jacob Parker, a vice-president of China operations at the U.S.-China Business Council.
“Now comes the hard work of finding consensus on the most difficult issues in the relationship, but with a commitment from the top we’re hopeful this will put the two sides on a sustained path to resolution,” he said.
Some, however, warned the pause might not last.
“Even if a truce happens this weekend, a subsequent breakdown of talks followed by further escalation still seems likely,” research firm Capital Economics said in a commentary.
The United States says China has been stealing American intellectual property for years, forces U.S. firms to share trade secrets as a condition for doing business in China, and subsidizes state-owned firms to dominate industries.
China has said the United States is making unreasonable demands and must also make concessions.
Talks collapsed in May after Washington accused Beijing of reneging on reform pledges. Trump raised tariffs to 25% from 10% on $200 billion of Chinese goods, and China retaliated with levies on U.S. imports.
At their meeting on Saturday, the leaders shook hands in front of flags in a small conference room, with Trump flanked by Secretary of State Mike Pompeo, a China hawk, and Treasury Secretary Steven Mnuchin, who has taken a more business-friendly approach to the talks.
Trump adviser Peter Navarro, known as the author of a book “Death by China”, watched Xi intently as he spoke.