Trade war fears ebb as US, China agree to continue talks

Trader Lauren Simons works on the floor of the New York Stock Exchange

However, although the ZTE deal proposal comes alongside a Chinese offer to remove tariffs on US agricultural products, a Journal source said: "The White House was meticulous in affirming that the case is a law enforcement matter and not a bargaining chip in negotiations".

President Trump campaigned in 2016 on ending what he said were "unfair" trade agreements with China and other nations, causing companies to leave the U.S., closing many manufacturing plants and leaving workers unemployed.

The ban amounted to a death sentence for ZTE, which relies heavily on USA parts, and the company announced that it was halting operations.

CPA CEO Michael Stumo said the focus for future negotiations must be to deny China the benefits of forced technology transfer that displace U.S. value-added supply chains. The company has suffered since the United States prevented it from purchasing USA components. Larry Kudlow, President Donald Trump's top economic adviser, said on the weekend that similar measures would be needed before the US would consider a reprieve.

Treasury Secretary Steven Mnuchin's declaration that the American tariffs would be suspended contributed to a sense of relief in global markets that the two countries had stepped back from the brink.

USA indices opened on the front foot, with the Dow Jones Industrial index leading the charge with a 300 point gain in early trade as investors' fears about a trade battle between the U.S. and China faded.

In the Reuters article, a Morgan and Stanley economist estimated the agreement would bring $60-$90 billion more in exports during a period of years, but less than the $200 billion trade deficit deduction that President Trump initially demanded. "The deal does nothing to reduce the U.S. trade deficit, grow American jobs, or boost domestic manufacturing".

In another tweet, Trump said: "China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products - would be one of the best things to happen to our farmers in many years!" Trump wrote on Twitter on Monday. The ban was a virtual death sentence for ZTE, which relies on USA parts.

The criticism from Schumer, Rubio and others expresses the positions advanced by the most hawkish anti-China sections of the Trump administration, represented by US Trade Representative Robert Lighthizer and trade adviser Peter Navarro.




Questions also remained over the administration's handling of ZTE.

President Donald Trump and China's President Xi Jinping meet business leaders at the Great Hall of the People in Beijing, China, Nov. 9, 2017.

Trump has said he will negotiate a tough deal with China in order to protect American workers.

On March 1, he threatened to impose a $50 billion tariff on China exports. China counterpunched with tariffs on US products, rattling the market.

Deal activity and waning fears about the US-China trade talks still pushed stocks higher, with the S&P 500 adding 21 points to 2,734. Most observers say a firm deal is likely to take a long time.

"The objective was not to put ZTE out of business", Mnuchin said.

"If the governments of the two countries reach a good agreement and results that are acceptable to both, they should stick to the agreement".

FILE PHOTO: Containers are seen at the Yangshan Deep Water Port in Shanghai, China April 24, 2018.

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