US, China agree to resume trade talks, markets jump

The announcement followed a call between (from left) US Treasury Secretary Steven Mnuchin, China's Vice-Premier Liu He and US Trade Representative Robert Lighthizer.
The announcement followed a call between (from left) US Treasury Secretary Steven Mnuchin, China's Vice-Premier Liu He and US Trade Representative Robert Lighthizer.PHOTO: REUTERS

BEIJING (REUTERS) – China and the United States on Thursday (Sept 5) agreed to hold high-level talks in early October in Washington, cheering investors hoping for a trade war thaw as new US tariffs on Chinese consumer goods chip away at global growth.

The new talks were arranged during a phone call between Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, China’s commerce ministry said in a statement.

They would be the first in-person, high-level discussions since a failed US-China trade meeting at the end of July prompted US President Donald Trump to proceed with fresh tariffs on virtually all remaining Chinese imports so far untouched by the trade war.

But there was no indication that the first round of these tariffs – a 15 per cent duty on Chinese consumer goods imposed on Sept 1 – would be rescinded or halt a planned Oct 1 tariff increase on US$250 billion (S$345 billion) worth of goods already levied at 25 per cent.

The US Trade Representative’s office did not specify timing for the ministerial-level talks, saying only that these would take place “in the coming weeks.”

“In advance of these discussions, deputy-level meetings will take place in mid-September to lay the groundwork for meaningful progress,” USTR spokesman Jeff Emerson said in a statement.

The United States and China remain far apart on the substance of a deal to end their 14-month trade war, with little movement since a May breakdown in the talks. At that time, the United States accused China of backtracked on earlier commitments for sweeping changes to its laws and practices on intellectual property protections, transfers of US technology to Chinese companies and increased US access to the Chinese market.


Nonetheless, financial markets breathed a sigh of relief at the potential cooling of trade tensions between the world’s two largest economies. US, Asian and European stock indexes all touched one-month highs on Thursday.

In afternoon trade, the Nasdaq Composite and Dow Jones Industrial Average were both up 1.5 per cent, with the broader S&P 500 up 1.3 per cent.

Aiding the rally was positive US economic data, including an estimate of private sector payrolls growth and an acceleration of US services sector activity.

On Sunday, Washington began imposing 15 per cent tariffs on an array of Chinese imports, mostly consumer products, while China began placing duties on US crude oil. On Monday, China said it had lodged a complaint against the United States at the World Trade Organisation.

Washington plans to increase the tariff rate to 30 per cent from 25 per cent on US$250 billion worth of Chinese imports from Oct 1.

The National Retail Federation said it was encouraged by confirmation of in-person trade talks, and urged Washington to end the trade war and work for a rollback of all tariffs.

“This trade war has gone on far too long, and the harmful consequences for American business and consumers continues to grow,” said the group, which bills itself as the world’s largest retail trade association.


China’s commerce ministry said its trade team will consult with its US counterpart in mid-September in preparation for negotiations in early October.

“Lead negotiators from both sides had a really good phone call this morning,” China’s commerce ministry spokesman Gao Feng said in a weekly briefing. “We’ll strive to achieve substantial progress during the 13th Sino-US high-level negotiations in early October.” Gao also said Beijing opposes any escalation in the trade war.

Analysts noted that investors remain nervous and markets could react with volatility on comments or actions from either side.

On Tuesday, Trump had warned he would be tougher on Beijing in a second term if trade talks dragged on, compounding market fears that disputes between the United States and China could trigger a US recession.

Trump on Thursday remained silent on Twitter about the newly agreed talks, and none of his key economic aides appeared on morning talk shows. Trump had lashed out at Beijing in past months, frustrated by its failure to follow through on purchases of US farm products that he said were agreed in his meeting with Chinese President Xi Jinping in June.

China, for its part, has been stung by Washington’s failure to make good on its promise to ease restrictions on Chinese tech giant Huawei Technologies.

The escalating tit-for-tat tariffs are taking a toll on China’s economy, which Liu, the country’s top trade negotiator, said faces increasing downward pressure.