When the long-awaited dinner between Donald Trump and Xi Jinping ran for some two hours, many suspected the talks were indeed constructive.
While there will invariably be all manner of additional color and, quite possibly, competing accounts of exactly what unfolded between the U.S. and Chinese delegations on Saturday, the bottom line is that there will be no additional tariffs after January 1. The news was originally reported by CGTN and came a little over a half hour after Larry Kudlow described the dinner as having went “very well.”
Just after the dinner concluded, Trump left the Park Hyatt hotel en route to the airport to make his way back to D.C. No initial readout was made available from the White House. Kudlow’s comments came as U.S. officials boarded Air Force One.
The White House has since confirmed. Trump will leave the tariff rate on the $200 billion in Chinese goods which were taxed at 10% from September 24 as is – it will not be raised to 25% at the turn of the year.
China will reportedly purchase “a not yet agreed upon but very substantial amount of agricultural, energy, industrial and other product from the U.S.” in order to reduce the bilateral deficit. Purchases of agricultural product from U.S. farmers will begin “immediately.”
Also starting “immediately” will be negotiations on “structural changes” regarding IP theft and forced technology transfer as well as talks on non-tariff barriers and cyber theft.
These “transactions” will reportedly be concluded within 90 days. If there is no broader agreement after that period, the 10% rate on the $200 billion in goods which were taxed from September will be raised to 25%.
You can expect a relief rally in risk assets. This is, on the surface at least, more than the market was hoping for. When you consider this in conjunction with last week’s Powell-inspired rally, the stage is set for a risk-on move.
More to come.