President Donald Trump on Monday portrayed his Saturday meeting with President Xi Jinping of China as an unequivocal success, insisting that U.S. farmers and automakers will quickly see benefits from a trade truce that has yet to produce any concrete commitments.
Trump and Xi agreed during the Group of 20 meeting in Buenos Aires to pause the trade war between the world's two largest economies for 90 days and work to resolve several areas of tension, including the trade gap between what America imports from China and what China buys from the United States. But nothing beyond their official statements exist, and deep divisions remain, particularly related to China's industrial policies and its treatment of U.S. companies.
That did not stop Trump from declaring victory for farmers, automakers and other key political constituencies in the wake of the meeting -- statements that helped send volatile financial markets higher Monday morning.
"Farmers will be a very BIG and FAST beneficiary of our deal with China," Trump said in a Twitter post Monday. "They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants."
Soybeans in Chicago led an advance in U.S. agriculture futures after the White House said China had agreed to immediately restart purchasing American farm products as part of a trade truce between the two countries.
The soybean contract for January delivery jumped as much as 3.2 percent to $9.23¾ a bushel, the highest since June, while corn and wheat also climbed.
China is expected to be back in the U.S. soy market in the new year, Agriculture Secretary Sonny Perdue said at an event in Chicago on Monday.
While the announcement lacked details and is far from a definitive arrangement, it's considered a significant development in the trade war that has beleaguered U.S. farmers, analysts say.
"This definitely changes some of the bearish psychology in this market," and traders and analysts will be keeping watch on whether it's followed by some actual purchases in the next few weeks, Rich Nelson, chief strategist for Allendale Inc. in McHenry, Ill., said by phone. "We have to wait for a lot of details but we will have a higher push in prices."
Larry Kudlow, Trump's top economic adviser, said the truce would begin Jan. 1, giving the two sides until April 1 -- rather than the March 1 date initially mentioned -- to strike a deal. And in a move that could signal a tough negotiation ahead, Kudlow said that Robert Lighthizer, the U.S. trade representative, would be formally taking over as the lead negotiator to hammer out a deal.
Lighthizer, who is known as a tough negotiator with an encyclopedic knowledge of trade law, is a longtime China skeptic who has repeatedly cautioned Trump not to accept vague Chinese promises that fail to materialize. Lighthizer will be taking the reins from Steven Mnuchin, the Treasury secretary, who led previous rounds of negotiations with the Chinese but was unable to close a deal that satisfied the president.
In a separate tweet late Sunday, Trump said that China had agreed to reduce and remove tariffs on cars exported to China from the United States. The current tariff rate is 40 percent, which China reached in response to Trump's tariffs, and it was not clear to what level it would fall.
Chinese state media made no mention of such a commitment, and the disclosure took trade watchers and auto industry figures in both countries by surprise. Auto tariffs had not appeared in the public disclosures from either the U.S. or Chinese governments issued after the two sides reached their temporary truce.
"We don't yet have a specific agreement on that, but I will just tell you ... we expect those tariffs to go to zero," Kudlow told reporters in a conference call from the White House.
Mnuchin gave mixed messages, appearing to confirm the auto tariff cut but then backing off.
"There is an immediate focus on reducing auto tariffs," Mnuchin told reporters. "There's a lot of work to be done over the next 90 days."
A spokesman for the Chinese Foreign Ministry referred questions to the Commerce Ministry. That ministry was silent, and its weekly news conference is not until Thursday.
China does not import many cars from the United States. U.S. imports are roughly 1 percent of the market, or about $10.5 billion worth. While Chinese drivers love to buy Chevrolets and Fords, those vehicles are generally made in Chinese factories through joint ventures between local and U.S. carmakers.
A concession on auto tariffs could be significant, however. It could suggest that China is willing to bend on the issue of Chinese-made cars, an area of great concern for the White House. The Trump administration worries that China could someday swamp U.S. car lots with Chinese-made cars that could seriously harm the Detroit automakers.
Despite Trump's optimism about the trade-dispute truce, his advisers were more cautious about the path ahead, which analysts say could be protracted and arduous given the long-standing differences between the two countries and the political risks for their leaders.
The Trump administration has been pressuring China to open its markets to U.S. companies without requiring joint ventures or forcing the sharing of intellectual property.
The agreement gives Xi political room to negotiate after Beijing said earlier talks were impossible while Washington "holds a knife" of tariff threats to China's throat. But both leaders face a mix of economic nationalists, free-trade advocates and other conflicting forces at home.
The outcome wasn't the result of a "significant change" by China, Louis Kuijs of Oxford Economics said in a report. Washington instead chose to see Beijing's argument that it already is making changes "in a more positive light."
Beijing has tried without success to recruit France, Germany, Japan and other governments as allies against Trump. They dislike the American president's tactics but echo U.S. complaints about market barriers.
Xi's government has offered to alter details but rejects pressure to discard blueprints such as "Made in China 2025," which calls for creation of champions in artificial intelligence, electric cars and other industries.
The tariffs battle has overshadowed changes Xi's government has announced this year.
While Beijing retaliated for U.S. tariff increases by imposing penalty charges on American soybeans, autos and other goods, it cut duties on factory machinery and other imports from other countries.
Business groups have welcomed those changes but say they don't address more important complaints about a thicket of rules limiting access to China's finance, logistics and other industries.
Companies want a genuine response with measurable goals, said Kenneth Jarrett, the president of the American Chamber of Commerce in Shanghai, in an email.
Information for this article was contributed by Keith Bradsher and Alan Rappeport of The New York Times, by Jim Puzzanghera of the Los Angeles Times, by Alfred Cang of Bloomberg News and by Joe McDonald of The Associated Press.
A Section on 12/04/2018