Global markets can breathe a sigh of relief. At least for now. President Donald Trump and China’s President Xi Jinping agreed to restart trade talks that had broken down almost two months ago. That means there won’t be an escalation in the tariff war between the two largest economies in the world that had worried financial markets, businesses and farmers.
In practical terms, the agreement doesn´t actually change anything about the current situation since existing import tariffs will remain in place. But Trump said he would not impose new tariffs that he had threatened and could have affected pretty much every Chinese export to the United States. “We’re holding back on tariffs and they’re going to buy farm products,” Trump said at a news conference. He didn’t give any details about what the promise to buy “farm products” would entail. “We will give them a list of things we want them to buy,” he said.
Trump and Xi agreed to the resumption of talks during an 80-minute sit-down on the sidelines of the G20 summit in Japan that the U.S. president said went better than expected. “We had a very, very good meeting with China,” Trump said, “I would say probably even better than expected, and the negotiations are continuing.” As part of the agreement, Trump also promised to lift some restrictions that had been imposed on Chinese technology giant Huawei.
Despite Trump’s optimism, there are still lots of unanswered questions, including when talks will actually resume. Analysts also cautioned that all the optimistic talk can’t change the fact that the United States and China don’t actually seem any closer to coming to a resolution on their disagreements. “This is candy for markets but it doesn’t really get us closer to resolving our deep differences,’’ Scott Kennedy, a China expert at the Center for Strategic and International Studies, tells Bloomberg.