WASHINGTON: There is a very good chance that the United States would strike a deal with China to end their trade war, said US President Donald Trump, adding that he was inclined to extend his March 1 tariff deadline and meet soon with Chinese President Xi Jinping.
US and Chinese negotiators had made progress and will extend this week’s round of negotiations by two days through Sunday, Trump told reporters at the White House as he met with his top negotiators and their counterpart, Chinese Vice Premier Liu He.
“I think that we both feel there’s a very good chance a deal will happen,” Trump said. Liu agreed there had been “great progress”. “From China, we believe that (it) is very likely that it will happen and we hope that ultimately we’ll have a deal. And the Chinese side is ready to make our utmost effort,” he said at the White House. The Republican president said he probably would meet with Xi in March in Florida to decide on the most important terms of a trade deal.
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Extending the deadline would put on hold Trump’s threatened tariff increase to 25% from 10% on $200 billion of Chinese imports into the United States. That would prevent a further escalation in a trade war that already has disrupted commerce in goods worth hundreds of billions of dollars, slowed global economic growth and roiled markets.
Optimism that the two sides will find a way to end the trade war lifted stocks, especially technology shares. The S&P 500 stock index reached its highest closing level since November 8. Oil prices rose to their highest since mid-November, with Brent crude reaching a high of $67.73 a barrel.
Trump and Treasury Secretary Steven Mnuchin said the two sides had reached an agreement on currency. Trump declined to provide details, but US officials long have expressed concerns that China’s yuan is undervalued, giving China a trade advantage and partly offsetting US tariffs. Announcement of a pact aimed at limiting yuan depreciation was putting “the currency cart before the trade horse,” but would likely be positive for Asian emerging market currencies, said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York.
“How can you agree to avoid excessive Chinese yuan depreciation or volatility if you have not made an agreement on trade that could have huge FX implications?” Ruskin asked in a note to clients.
Trump said a deal with China may extend beyond trade to encompass Chinese telecommunications companies Huawei Technologies and ZTE Corp.
Published in The Express Tribune, February 24th, 2019.
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