Published: Thu, December 06, 2018
Money | By Wilma Wheeler

Dow Futures Surge After Trump-Xi Trade Truce

Dow Futures Surge After Trump-Xi Trade Truce

China slapped a 25% tariff on USA soybean shipments, among other levies, in response to Trump ordering punitive tariffs on Chinese imports to the U.S. Trump wrote on Twitter. China has not yet confirmed that, and China's Foreign Ministry spokesman Geng Shuang refused to comment Monday on the topic to CNN.

Questioned about the agreement on Monday, Treasury Secretary Steven Mnuchin and Trump's top economic adviser, Larry Kudlow, dialed back expectations and added qualifiers. We can't yet determine whether both parties will be able to reach an economic trade deal within the 90-day period, as its unclear how much China is willing to sacrifice towards this deal.

President Donald Trump and Chinese President Xi Jinping agreed to a truce in the ongoing trade war this weekend.

President Donald Trump on Sunday announced that China had agreed to rollback its tariffs on American automobiles below 40 percent.

In exchange, the two countries agreed to re-start talks on the United States concerns that triggered the dispute, including "forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft", according to the White House.

"I believe it's hard to complete all the related tasks and resolve all the issues clearly within 90 days".

Under the agreement, Trump is shelving a plan to raise existing tariffs of 10 percent to 25 percent from the start of next year.

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On Saturday, Trump and Chinese President Xi Jinping agreed to hold off on future tariffs until March 1. "But they have to deliver on this". Ford decided not to import a crossover-ized Focus from China, Volvo began sourcing the XC60 from Sweden rather than from China, Buick considered canceling the American-spec Envision, and Cadillac stopped selling the hybrid CT6 it builds on the outskirts of Shanghai. Benchmark U.S. crude gained 44 cents to $53.39 per barrel in electronic trading on the New York Mercantile Exchange. Financial markets were left struggling to digest talks that the White House portrayed as a major victory for the president.

Trump, as often in his diplomatic dealings, appears to consider his personal chemistry with Xi the most important factor in the success of the negotiations. "It's risky. There's certainly no guarantees that it will produce the outcomes that we want". Chinese regulators in July blocked Qualcomm's $44 billion takeover bid for its Netherlands-based rival, NXP Semiconductors NV.

The United States has slapped steep tariffs on Chinese goods valued at $250 billion since the beginning of July, while China has retaliated with reciprocal tariffs on $110 billion worth of USA goods. But for United States cars, China added a 25 per cent tariff over the summer, making the rate 40 per cent. Such a change would have to apply to all countries under World Trade Organization rules.

Shares in BMW jumped more than 6% on Monday morning in Frankfurt following Trump's tweet, while Daimler's stock leaped more than 5%.

Through a translator, Mr. Xi said that "only with cooperation between us can we serve the interest of global peace and prosperity and that is why I look forward to this meeting".

Any move to reduce or eliminate the extra tariff is a boon for carmakers such as Tesla, BMW and Daimler, which all produce cars in the United States and import to China. It does, however, include some points not included in the United States statements, such as that the two sides agree to boost market access and will work toward scrapping all tariffs.

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