Trump delays China tariff hike after progress in Washington talks
US President Donald Trump has pressed pause on a planned increase in tariffs on Chinese goods that was set for 1 March, after he said "substantial progress" had been made in the latest round of bilateral talks.
Trump said he would meet Chinese leader Xi Jinping to secure a trade deal if productive talks continue.
The White House initially planned a hike in tariffs from 10% to 25% on $200bn worth of Chinese imports if an agreement was not reached by 1 March.
In a tweet on Sunday, President Trump said: “I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.
“As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for US & China!”
The president did not set a new deadline for the talks to conclude according to White House sources he said there could be "very big news over the next week or two" if all goes well.
Shares in Asian markets soared to their highest point for five months on Monday after Trump’s optimist announcement.
The Shanghai market saw surged 3.5%, taking this year’s gains to more than 20%. The Nikkei in Tokyo was 0.5% higher while the Kospi in Seoul rose 0.45%.
An article on China’s state news agency, Xinhua, stressed that the talks would prove more challenging in the final stages and were subject to unspecified “new uncertainties”. This article said the trade conflict will be “long-term, complex and difficult”.
There was small movement in US Treasuries, with 10-year US yields two basis points higher relative to last week’s close at 2.67%.
"The insouciance of USTs in the face of this news indicates that such a delay had been widely anticipated – an assertion supported by recent widely publicised speculation that Trump’s stomach for raising the stakes with China is limited owing to a desire to shore up US equities as the 2020 presidential campaign looms into view," said analysts at Rabobank.
"In terms of the ramifications of Trump’s seemingly widely anticipated decision overnight (with the apparent clear exception of Chinese equity investors) we would make the following observations. First, this move purely represents a hiatus rather than a de-escalation of the trade war – i.e. existing tariffs will remain as will the threat of further levies."
Trump's announcement comes as he prepares to meet with North Korean leader Kim Jong Un this week in Hanoi, Vietnam, in the second summit between both leaders.
Earlier on Sunday, Trump tweeted about China’s role in his relationship with North Korea: "President Xi of China has been very helpful in his support of my meeting with Kim Jong Un. The last thing China wants are large scale nuclear weapons right next door. Sanctions placed on the border by China and Russia have been very helpful. Great relationship with Chairman Kim!"