President Donald Trump said he’ll extend a deadline to raise tariffs on Chinese goods beyond this week, citing “substantial progress” in the latest round of talks that wrapped up Sunday in Washington.
“The U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues,” Trump said in a Twitter posting. “As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1.”
China’s official Xinhua News Agency echoed Trump’s tweet, citing "substantial" progress. But a commentary published later cautioned that the talks may face "new uncertainties," noting that bilateral trade frictions are "long-term, complicated and arduous."
If the sides make further headway in negotiations, Trump said he and China’s President Xi Jinping planned to meet at his Mar-a-Lago resort in Florida to conclude an agreement, though he didn’t offer any details on when the meeting might be or how long he expects the tariff extension to last.
U.S. stock futures climbed in Asian trading Monday, Chinese shares surged 5.6% and the offshore yuan strengthened on the back of optimism for a deal. The turnover of Chinese stocks traded was the most since 2015, and the Topix index of Japanese stocks also rose.
The latest series of U.S.-China trade meeting was supposed to end Friday, but China’s Vice Premier Liu He extended his visit to Washington into the weekend. Treasury Secretary Steven Mnuchin said on Friday that a leaders’ meeting at Mar-a-Lago is being tentatively planned for late March. Xi would be unlikely to be able to leave China before the end of the annual "Two Sessions" meetings, which are due to finish in the middle of the month.
Pushing back the deadline to more than double U.S. tariffs on more than $200 billion of Chinese goods will help soothe investor worries that a ratcheting-up of the trade war would derail a global economic expansion that’s already showing signs of softening. The U.S. Trade Representative’s office plans to issue a formal order this week to delay the rise in tariffs.
The latest round of negotiations produced an agreement on a currency provision, according to Mnuchin, who didn’t elaborate on its details. Bloomberg News reported earlier that the U.S. was asking China to keep the value of the yuan stable to neutralize any effort to soften the blow of U.S. tariffs.
Still, the negotiating teams hadn’t struck a deal as of late Saturday on how to monitor any currency pact. The Trump administration has said it will insist on strong enforcement measures as part of any deal after complaining that Beijing failed to act on past reform pledges.
There is a lot of skepticism in the U.S. that China will live up to any promises it makes. Oregon Senator Ron Wyden called for any deal to be shared publicly with Congress before it was agreed, so "we can judge whether it amounts to a better deal than the status quo or simply reheats the leftover promises made to prior administrations."
"Trump wants a deal, not a war," as his time is running short with the 2020 election on the horizon, according to Gene Ma, chief China economist at the Institute of International Finance. "I expect Beijing will offer a longer shopping list, no yuan devaluation, better intellectual property rights protections, and fewer forced-joint ventures."
During the latest round of talks, the sides continued to put their commitments in writing. The documents, which cover issues like U.S. accusations that foreign companies are forced to transfer their technology in China and alleged intellectual property theft will eventually be merged into a single agreement for the presidents’ final approval, according to a person familiar with the talks.
The person said a draft agreement on China’s technology transfer policies -- one of the toughest issues -- took shape over the course of the week.
China offered to buy an additional 10 million metric tons of American soybeans during the most recent talks, U.S. Agriculture Secretary Sonny Perdue said on Twitter on Friday.
Uncertainty posed by the trade war has taken a toll on both economies and caused some turmoil in financial markets.
"The agreement this time seems only to aim at no hikes of tariffs, rather than scrapping all existing ones, which means that the U.S. damage to the world economy and its own economy will continue," said Zhou Xiaoming, a former commerce ministry official and diplomat. "The trade war is still on, but just not getting worse."
By Jenny Leonard and Andrew Mayeda