China and the United States agreed to halt additional tariffs in a deal that keeps their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching an agreement within 90 days.
The White House said on Saturday that President Donald Trump told Chinese President Xi Jinping during high-stakes talks in Argentina that he would not boost tariffs on $200 billion of Chinese goods to 25% on Jan. 1 as previously announced.
Beijing for its part agreed to buy an unspecified but “very substantial” amount of agricultural, energy, industrial and other products from the U.S., the White House said in a statement.
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New trade talks
The two sides will also launch new trade talks to address issues including technology transfer, intellectual property, non-tariff barriers, and agriculture, it said.
If no deal is reached within 90 days, both parties agreed that the 10% tariffs will be raised to 25%, the White House said.
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On Sunday, China’s state-run media lauded the “important consensus” reached by the two leaders but did not mention the 90-day deadline.
Mr. Trump had imposed 10% on $200 billion worth of Chinese goods in September. China responded with its own tariffs.
The U.S. President has also threatened to slap tariffs on another $267 billion worth of Chinese imports, as the relationship appeared set to worsen in the weeks ahead of the Argentina meeting.
“I think this is not a breakthrough — it’s more of avoiding a breakdown. This is not a worst case outcome but the hard work is ahead of them,” said Paul Haenle, Director at the CarnegieTsinghua Center in Beijing.
“The Chinese have to come into (the talks) with a sense of urgency,” he added.
As part of the deal, China agreed to start purchasing agricultural products from U.S. farmers immediately, the White House said.
Speaking to reporters on board Air Force One, Mr. Trump hailed his agreement with Mr. Xi.
Incredible deal: trump
“It's an incredible deal,” Trump said. “What I’d be doing is holding back on tariffs. China will be opening up. China will be getting rid of tariffs.”
He said China would buy a “tremendous amount of agricultural and other product” from the United States. “It’ll have an incredibly positive impact on farming.”
State Councillor Wang Yi, the Chinese government’s top diplomat, told reporters in Buenos Aires that the two sides believed the agreement “effectively prevented the expansion of economic frictions between the two countries”. “Facts show that joint interests between China and the United States are greater than the disputes, and the need for cooperation is greater than frictions,” he said.
U.S. companies and consumers are bearing part of the cost of the U.S. tariffs on China by paying higher prices for goods, and many companies have increased prices of imported goods.
At the same time, U.S. farmers have been hurt by reduced Chinese imports of soybeans and other products.
Qualcomm-NXP deal
China “is open to approving the previously unapproved” deal for U.S. company Qualcomm Inc to acquire Netherlands-based NXP Semiconductors “should it again be presented,” the White House statement said.
In July, Qualcomm —the world's biggest smartphone-chip maker — walked away from a $44 billion deal to buy NXP after failing to secure Chinese regulatory approval, becoming a high-profile victim of the China-U.S. trade dispute.
Qualcomm and NXP did not immediately respond to requests for comment late on Saturday.
Beyond trade, Mr. Xi also agreed to designate the drug fentanyl as a controlled substance, the White House said.
For more than a year, Mr. Trump has raised concerns about the synthetic opioid being sent from China to the United States, which is facing an epidemic of opioid-related deaths.
Scott Kennedy, a China expert at the Center for Strategic and International Studies in Washington, said the United States appeared to come out slightly ahead in the overall agreement.
“Beijing at best gets a temporary reprieve from additional tariffs, but was unable to get the U.S. to agree to return to ‘business as usual’,” he said.