Trump cancels fresh tariffs as first stage of US-China trade deal reached

The US has scrapped tariffs that would have been introduced on Chinese goods at the weekend
The US has scrapped tariffs that would have been introduced on Chinese goods at the weekend

America’s trade battle against China could be in its closing act after US President Donald Trump struck a tentative deal with Beijing.

The world’s two largest economies announced a major cooling of tensions, including cuts to punitive import tariffs.

Reporters at a late-night press briefing in the Chinese capital were told that arrangements for both sides to meet and sign a so-called phase one deal were being made.

President Trump then confirmed the plans in a tweet.

The agreement could pave the way for a much deeper tie-up - potentially ending the damage which the pair's spat is doing to the world economy.

US President Donald Trump tweeted that he had decided to scrap a fresh round of tariffs on goods including laptops and toys, which was due to be imposed on Sunday if the first stage of a deal had not been reached.

He wrote: “We have agreed to a very large phase one deal with China.

“The Penalty Tariffs set for Dec 15 will not be charged because of the fact that we made the deal.

“We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election. This is an amazing deal for all.”

Existing tariffs of 25pc on $250bn of Chinese imports will stay in place pending further talks about a second-phase deal, but half the 15pc tariffs imposed on $120bn of goods such as clothing will be halved, a significant concession.

Because the agreement is only a deal in principle, the US can reimpose tariffs if China breaks any part of it.

However, detail on what the US will get in exchange for reducing its leverage was scant. 

Michael Pearce, senior US economist at Capital Economics, said: “US farmers and energy firms are unlikely to step up investment and output until there is more certainty that purchases will be sustained.

“Accordingly, the main near-term impact of the phase one deal, assuming it actually gets signed, is that it removes the threat of final consumer tariffs and adds to the sense that the downside risks to the economy are fading.”

The agreement boosted US stocks, which had opened down on Friday morning after hitting record highs the previous day due to rumours an agreement was close.

The Dow Jones index climbed back into the black and was flat last night.

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