Dow Futures Surge After Trump-Xi Trade Truce

Donald Trump hails 'amazing and productive' talks, as US agrees to suspend new China tariffs for 90 days

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"It goes down, certainly - if it happens, it goes down as one of the largest deals ever made", Trump told reporters aboard Air Force One as he returned from Argentina.

"China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries".

The biggest headline is that both sides have agreed to temporarily hold off on the implementation of new tariffs.

The White House made clear that the 10 per cent tariffs would still leap up to 25 per cent if China doesn't meet USA demands in 90 days.

China's foreign ministry declined to confirm Trump's assertion on Monday, instead saying: "On December 1 President Xi and President Trump reached an important consensus on trade issues".

Trump's tweet did not explain which tariffs would be reduced or removed, or when China would act.

In July, China reduced auto import duties from 25 per cent to 15 per cent, a boon for worldwide carmakers keen to grow sales in the world's largest auto market. China, which hiked the tariff on USA -made cars coming into the country to 40 percent amid the trade fight, hasn't made a similar announcement on auto tariffs.

China has already slapped tariffs on $110 billion in US goods.

On the US side, these included advisers such as Kudlow and Treasury Secretary Steven Mnuchin, who are widely seen as wanting to cut a deal, but also hawkish advisers like Peter Navarro and US Trade Representative Robert Lighthizer. So far, China has been unwilling to commit to long-term changes that address the Trump administration's concerns.

In exchange, the USA wants an immediate start to talks on Trump's biggest complaints about Chinese trade practices: intellectual property theft, non-tariff barriers and forced technology transfer. If Trump took any action to rally his fellow democratic leaders to confront the looming threat of China or Russian Federation, or to hold Saudi Crown Prince Mohammed bin Salman to account for the murder of journalist Jamal Khashoggi, there was no indication of it.

Asian stock markets opened higher on Monday in the wake of the truce, with Tokyo rising by one percent and Hong Kong and Shanghai rising by more than two percent.

After being spooked by the conflict, investors returned to buying following the long-awaited meeting between the two presidents.

With US-Chinese disagreements on Trump's demands for better market access and intellectual property protections so profound, any real breakthrough was considered unlikely. "The existing tariffs are still having a negative impact on the Chinese economy, they haven't gone away".

The agreement, hashed out over steak in the Argentine capital Buenos Aires, lowers the temperature in a conflict that has spooked world markets.

The nationalist Global Times tabloid called it a "momentous step forward" that brings "huge potential for fair trade". The agreement keeps those tariffs at 10 percent for at least the next 90 days while the countries negotiate further.

The US President had previously planned to raise tariffs on certain Chinese goods to 25 percent on January 1, but revoked this plan as a result of the talks.

Trump has already imposed import taxes on $250 billion in Chinese products - 25 percent on $50 billion worth and 10 percent on the remaining $200 billion.

U.S. exports of cars and light trucks to China were worth US$9.5 billion in 2017 and have dropped off significantly since China imposed its retaliatory tariffs over the summer that gave exporters in Europe and Japan a significant advantage.

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