Published: Fri, December 13, 2019
Global News | By Blake Casey

Trump Signs Off on Trade Deal With China to Avert December Tariffs

Trump Signs Off on Trade Deal With China to Avert December Tariffs

Wall Street hit fresh record highs for the first time in a fortnight on the back of the President's tweet and the media reports.

Prior to the United States and China agreeing to a tentative two-part deal in October, the two countries were lobbying retaliatory blows that would make a Mafia boss blush, including China banning National Basketball Association broadcasts to its population of 1.4 billion after a Houston Rockets executive tweeted his support for Hong Kong protesters.

The three main indexes opened lower but quickly gained ground after Trump's statement five minutes after markets opened, which comes just days before the tariffs go into effect on December 15.

White House officials have downplayed the risks, arguing the tariffs are aimed at making China give up "unfair" trade practices, such as alleged intellectual property theft.

Robert Lighthizer, the USA trade representative leading the negotiations with China, is in a camp who sees progress in talks and wants them to continue without further escalation, according to people familiar with the discussions.

The White House has reached a "deal in principle" to resolve the 17-month US-China trade war by agreeing to halt a round of tariffs set to kick in on Sunday, according to reports.

Global stocks hit a record high and bond yields climbed on optimism over trade.

If an agreement is not reached by Sunday, additional USA levies on Chinese products will take effect.

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Democratic lawmakers in a letter on Thursday told the president this point in the negotiations marks a "critical juncture" for the United States to secure concessions "on major structural challenges that will only become more hard to address".

China also said it will reinstitute on Sunday an additional 25 per cent tariff on US -made vehicles and 5 per cent tariffs on auto parts that had been suspended at the beginning of 2019.

As part of the deal, the USA will also roll back some of the existing tariffs. Trump said in the morning tweet. If the U.S. does not suspend the new tariffs, Beijing officials will apply more tariffs on USA goods and may suspend talks until after the United States presidential election in November 2020, many trade experts believe.

The final percentage of tariff rate reduction the USA might offer Beijing has not been set, and will be proportional to the amount of the Section 301 trade war issues addressed by Chinese concessions, one source said.

"This one seems a little bit more tangible than some of the previous ones, but I still think investors are wise to wait ... for something actually being signed."

In August, China said it would impose 5 percent and 10 percent in additional tariffs on $75 billion of US goods in two batches.

At 11:06 a.m. EDT on Thursday, WTI Crude was up 1 percent at US$59.35 and Brent Crude was trading up 1.13 percent at US$64.44.

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