Market News & Headlines >> Markets Wait For China to Buy
Commodities futures and equities markets rallied on Monday on the news that President Trump and China’s President Xi Jinping had agreed to a 90-day “cease-fire” in the ongoing U.S.-China trade conflict, but traders are now waiting to see promised Chinese buying of U.S. products.
China agreed to buy 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,” according to a Saturday statement from the White House press secretary, which also said China had agreed to start buying U.S. agricultural products “immediately”.
In turn, President Trump agreed to leave the U.S. import tariff on $200 billion worth of Chinese product at the current 10% rate, and not raise it to 25% on Jan. 1, the White House statement said.
The two leaders also agreed to immediately begin talks on “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture”, the statement said.
Both parties agreed they would try to complete that “transaction” within the next 90 days and if they are unable to reach an agreement at the end of that period, the 10% U.S. import tariffs will be raised to 25%.
China agreed to begin lifting tariffs and non-tariff import barriers immediately, including reducing its 40% tariffs on autos, White House economic advisor Larry Kudlow said on Monday. “We expect those tariffs to fall to zero,” he told reporters.
However, U.S. Agriculture Secretary Sonny Perdue told reporters that whether or not China will lift its 25% import tariff on U.S. soybeans as part of the trade truce has “yet to be determined”. Perdue did say that he expects China to resume buying U.S. soybeans around Jan. 1 because of shrinking old-crop supplies in South America.