U.S. Trade War with China on Hold
The U.S. trade war with China is on hold after the world’s largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said. The U.S. and China have agreed to cooperate on trade, with China set to ‘significantly increase’ what it buys from the U.S. to narrow China’s $375 billion trade advantage. Both sides agreed on meaningful increases in United States agriculture and energy exports.
According to the WSJ, one of Washington’s central demands is that China reduce its merchandise trade surplus by at least $200 billion by the end of 2020. Settling the trade fight is taking on a degree of urgency as the tensions start hurting businesses in both countries. According to the U.S. goods, including sorghum, soybeans and cars, have faced growing hurdles when entering China, while a U.S. order banning American companies from selling components to ZTE not only threatens the survival of the company but also that of other state-owned Chinese companies.
The U.S. had previously threatened to impose tariffs on as much as $150 billion in Chinese imports to punish Beijing for allegedly violating American intellectual property and unfair trade practices. China vowed to retaliate with tariffs on everything from soybeans to airplanes. The United States’ two largest exports to China by value last year were aircraft, at $16 billion, and soybeans, at $12 billion. “We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Mnuchin said in a television interview on CBS.
Vice Premier Liu He, chief of the Chinese side of the China-U.S. comprehensive economic dialogue, said:
The two sides agreed not to launch a trade war and to stop slapping tariffs against each other, which are the most remarkable fruits of the consultations. The most important reason for the achievements is the important consensus reached previously by Xi and his U.S. counterpart Donald Trump, and the fundamental cause is the needs of the two peoples and the whole world.
The two sides will enhance their trade cooperation in such areas as energy, agriculture products, health care, high-tech products and finance. Such cooperation is a win-win choice as it can promote the high-quality development of the Chinese economy, meet the people’s needs, and contribute to the U.S. effort to reduce its trade deficit.