Donald Trump says he believes Xi Jinping is honest on trade

Xi Jingping

Xi Jingping

"We are either going to have a REAL DEAL with China, or no deal at all - at which point we will be charging major tariffs against Chinese product being shipped into the United States".

The threat of an escalating trade war between the world's two largest economies has loomed large over financial markets and the global economy for much of the year, and investors initially greeted the ceasefire agreed by Trump and Chinese President Xi Jinping over the weekend with relief. "Ultimately, I believe, we will be making a deal - either now or into the future", Trump tweeted on December 4. I am a Tariff Man.

He added: "When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so". China had been the largest purchaser of USA soybeans, buying $12.25 billion worth of that product in 2017.

The two sides would also discuss intellectual property protection, technology cooperation, market access and fair trade, and "work hard to reach a consensus", Gao said. One senior administration official said most officials generally agree to "let the pressure ride" on China and focus on concluding trade deals with other partners first. But Kudlow acknowledged on Tuesday that so far they haven't seen any evidence of concrete steps being taken.

"China's discussed these things with the US many times down through the years and the results have not been very good", he said.

That optimistic tone contrasted with Chinese criticism of Canada's arrest of an executive of technology giant Huawei who a Toronto newspaper said is accused by the United States of trying to violate trade curbs on Iran. "China does not want Tariffs!"

China imports nearly 90 percent of its soybeans, and the United States had been the country's primary supplier of soybeans.

Trump, meanwhile, last week signaled he is still itching to open up a third front in his global trade war, urging Congress to support what could be up to 25 percent tariffs on vehicles imported from other trade partners, such as Germany. They jumped Monday in response to Saturday's truce, but then fell again Tuesday morning.

Those lower rates suggested that investors expect the US economy to slow, along with global growth, and possibly fall into recession in the coming year or two.

Kudlow said he did not think that vehicle tariffs were imminent, though he added that they were in Trump's "quiver of arrows".

In the meantime, the outlines of the agreement remain hazy and in some cases confusing.

Exporters of bags to toys in China cautioned that the trade war truce between the USA and China may provide just a minor respite in hostilities.

Mr Trump has long accused China of unfair trade practices that hurt U.S. citizens and the economy.

Shares of U.S. and overseas auto companies rose on the announce-ment, though it's unclear how much companies like GM or Ford will actually benefit.

Still, China routinely makes commitments that it does not keep. It also would begin buying products from United States farmers "immediately".

At the start of the administration, Trump failed on that front when he pulled the United States out of the Trans-Pacific Partnership - a pact joining 12 major trading economies along the Pacific Rim in a trade agreement created to push back against China's mercantilist behavior.

But Kudlow said the ultimate amount will depend on market prices and the health of China's economy.

Still, Trump's madcap unpredictability - and his juggling of the factions within his administration - make anything possible.

But the White House has now backpedaled, acknowledging there was no deal in place to roll back automotive tariffs. Japan and the European Union, Britain, the Philippines and possibly Taiwan, he said, would naturally take precedence over China.

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