Trump and Xi agreement buys time in trade war

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

On Saturday, Trump and Chinese President Xi Jinping agreed to hold off on future tariffs until March 1.

Trump's tweet did not give any further detail about the tariff cuts, such as when the deal had been reached or a new level for the Chinese levies.

China has agreed to "reduce and remove" tariffs below the 40% level that Beijing is now charging on U.S. cars, Donald Trump has claimed, amid a trade war truce agreed by the two countries.

"President Xi and I have a very strong and personal relationship".

After 90 days, if there's no progress on structural reform, the US will raise those tariffs to 25 percent, White House Press Secretary Sarah Huckabee Sanders said in a statement.

That put US-made car brands like Tesla and Ford Motor Co's Lincoln at a major disadvantage, soon after China slashed auto import tariffs broadly to 15 percent for most vehicles.

On Monday, China's ministry of foreign affairs said the Chinese and US presidents had agreed to work towards removing all tariffs.

Buyers and analysts quickly pointed out on Monday that China's tariffs on USA farm produce are still in place, mostly 25 per cent duties on soybeans, corn, sorghum and wheat.

The U.S. leader said U.S. farmers "will be a very BIG and FAST beneficiary of our deal with China".

"Beyond the political spin, the meeting between Trump and Xi can be considered a success in that the threatened escalation of trade tensions has been pushed back three months and the two parties are once again communicating", Greg Daco of Oxford Economics said.

The tariffs stem from the Trump administration's demands that China make sweeping changes to its intellectual property practices.

The White House said Saturday that China had agreed to purchase a "very substantial" amount of agricultural, energy, industrial and other products from the United States.

China agreed to resume purchases of some USA farm and energy commodities.

What happens if there's no deal after 90 days?

America and China have been in economic combat for months. Chinese officials discussed the possibility of lowering tariffs on USA vehicle imports before Xi met Trump in Argentina, according to a person familiar with the situation who asked not to be identified.

Many US automakers build their cars in China, but for some the tariff hikes have hit sales.

The U.S. imposes a 27.5-percent tax on imported cars and light trucks from China.

In China, Hong Kong's Hang Seng index and Shanghai Composite were up more than 2% in early trading, while Japan's Nikkei 225 rose more than 1%.

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.

"I think there is a specific understanding that we are now going to turn the agreement the two presidents had into a real agreement in the next 90 days", Mnuchin told reporters at the White House on Monday.

"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.

Wang Cun, director of the China Automobile Dealers Association's import committee, told reporters in Beijing: "If they cancel the extra 25 percent tariff on US-made cars, then we will see positive signs for imported cars".

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