Global shares jump on US-China trade 'truce'

USA and China stopped their war for three months

TRADE WAR: Europe and Asia stock markets higher as China and US agree CEASEFIRE

President Donald Trump talks during his bilateral meeting with China's President Xi Jinping, Saturday, Dec. 1, 2018 in Buenos Aires, Argentina.

Beijing cut import duties on foreign autos to 15 percent in July but added a 25 percent penalty for USA -made vehicles the following month in response to Trump's tariff hikes.

In a surprise announcement tweeted Sunday night, Trump also said China would "reduce and remove" tariffs of 40 percent on cars, though Beijing has yet to confirm the move.

"I'm taking President Xi at his word, at his commitment to President Trump.

If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent", the statement said.

U.S. Trade Representative Robert Lighthizer said last week he was examining all available tools to raise U.S. tariffs on Chinese vehicles to the 40 percent that China was charging on U.S. -produced vehicles.

While the Trump administration emphasized trade issues such as a 90-day moratorium on raising tariffs and Xi's concession to buy "very substantial" amounts of US goods, China focused on diplomacy, regional issues and an agreement to try to quickly resolve their differences. China will immediately state buying US agricultural products.

For its part, China has responded with tariffs ranging between five and 25 percent on US$110 billion worth of U.S. goods.

The tweet comes after the US and China emphasized different results from Sunday's high-stakes meeting between Trump and Xi.

"We make the finest and cleanest product in the World, and that is what China wants", he wrote on Twitter.

The Trump administration also said China would purchase "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".

"While we are pleased that American consumers have been protected from additional tariffs on most of our products to date, this announced 90-day reprieve on increased and future tariffs is promising and we hope it will lead to the swift removal of the punitive tariffs already imposed by the administration". 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.

Chinese news outlets also claimed both sides plan to eliminate all tariffs, which doesn't appear in the US statement. The U.S. now charges a 27.5 per cent tax on imported cars from China.

Chinese state media gave a cautious welcome on Monday to the trade war truce.

According to the agreement, the U.S. and China will not increase or introduce new tariffs for 90 days.

"Trump's latest tweets this morning, which touted the benefits of the agreement for United States farmers and his own prowess as a dealmaker, suggest he will be reluctant to walk away from negotiations for a second time", he said.

The United States had a $335.4 billion trade deficit with China in 2017.

"China right now has major trade barriers-they're major tariffs-and also major non-tariff barriers, which are brutal".

Prospects in Congress for the new deal - the U.S. -Mexico-Canada Trade Agreement - were complicated by the midterm elections, which left opposition Democrats in control of the U.S. House.

"This Statement is not a formal agreement, but the tone and direction seems very constructive for semis", said Stein in a note out on Monday. "That appears to have been a key consideration for Trump, who became more open to a deal as USA stock markets weakened in October and November".

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