China, US Trade War News: Xi, Trump Declare Truce

The working dinner after the G20 leaders summit in Buenos Aires
The world’s two largest economies reached a trade war ceasefire during a cordial dinner meeting that took place on the sidelines of the G20 summit in Buenos Aires. (Photo: REUTERS/Kevin Lamarque)

The United States and China agreed on a 90-day ceasefire in a trade war which since July has placed global markets and worldwide economy in a limbo. The truce was reached during a dinner meeting between Chinese President Xi Jinping and US President Donald Trump at the sidelines of the G20 Summit in Buenos Aires, the White House announced on Dec. 1.

Specifically, Trump decided to leave the tariffs on $200 billion worth of product at the 10 percent rate as compared to 25 percent which his administration has originally planned.

Xi, on the other hand, agreed that his country will purchase agricultural, energy, industrial, and other products from the United States. The amount has yet to be finalized but China's purchase is set to reduce the trade imbalance between the world's two largest economies, the White House said. Purchase of US agricultural products by Chinese entities, meanwhile, would commence immediately, the White House added. The Chinese president also welcomes the possibility of approving the halted Qualcomm-NXP deal between his country and the United States.

The presidents of the two powerhouses have also agreed to begin talks about misunderstandings on technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions, and cyber theft, services, and agriculture. The two nations pledged that they will commence discussions regarding these issues within the next 90 days.

On more important geopolitical relations, the presidents of the two powerhouses agreed that great progress has been made with respect to discussions involving North Korea's nuclear weapons program, according to the official announcement from the White House. Both Xi and Trump pledged to have a cordial discussion with NorKor leader Kim Jong Un to achieve a nuclear-free Korean Peninsula.

As reports of the truce spread, the markets have simultaneously responded positively. CNBC reported that Asian stocks traded higher on Monday after the White House announcement.

Hong Kong's Hang Seng index rose to 2.5 percent while Japan's Nikkei increased by 1.28 percent. Topix index also performed better at 1.40 percent increase.

South Korea's Kospi climbed 1.63 percent.

Australia's ASX 200 jumped 1.60 percent, with shares of the country's key minors started with strong gains. Rio Tinto climbed 1.98 percent, Fortescue Metals Group climbed 5.25 percent while BHP Billiton increased by 3.26 percent.

Dow Jones Industrial Average jumped by 400 points as soon as trading started at 6 pm in New York on Sunday.

Oil prices also jumped following the ceasefire announcement. For one, Brent jumped 3.26 percent to $61.61 per barrel. US crude futures increased 3.95 percent to $52.94 per barrel, CNBC reported.

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