Published: Wed, December 05, 2018
Money | By Bruce West

China-US Ceasefire Paves Way For New LNG Projects

China-US Ceasefire Paves Way For New LNG Projects

Washington and Beijing said they will try to achieve a permanent deal within the next 90 days, however the USA still has significant leverage, stating that if a formal deal can't be reached then it will hike tariffs from 10 percent to 25 percent, which could roil global stock markets, stagnate global economic growth, dampen oil demand growth and possibly lead to a recession across the globe, particularly in emerging economies.

After describing the agreement made between China and the United States during the G-20 summit in Argentina over the weekend as "an incredible deal" and "one of the largest deals ever made", Donald Trump has done an unsurprising 180 after apparently finally appearing to catch up with reality.

In his briefing with reporters, Kudlow said he assumed that the Chinese would eventually drop their auto tariffs altogether. Kudlow initially said that the Chinese had 90 days from January 1 to come up with "structural changes" regarding intellectual property protections, forced technology transfer and other issues.

As it was presented by Trump on Saturday, he and Xi had agreed that, in return for the USA deferring a foreshadowed increase in the rate of tariffs on $US200 billion of Chinese exports to the United States for 90 days, China would agree to purchase "very substantial" amounts of U.S. products "immediately".

Trump and Chinese President Xi Jinping on Saturday agreed to the ceasefire in a trade war that has seen the flow of hundreds of billions of dollars worth of goods between the world's two largest economies disrupted by tariffs.

The president tweeted optimistically about the chances for a deal with China, writing "President Xi and I want this deal to happen, and it probably will". It also said China has agreed to start purchasing agricultural products from USA farmers immediately.

The announcement came as part of a 90-day halt in which the president will delay a scheduled tariff increase on China, Fox News noted.

If negotiations sputter, Mr Trump has his finger on the trigger, as he made clear in a tweet on Tuesday: "I am a Tariff Man".

There was reportedly no document signed by the two sides following their meeting in Argentina. This fundamental misunderstanding of economics, combined with his reckless announcement of the detente that wasn't, scared investors and continues to undermine his administration's efforts at reaching a real trade deal with China. Per the president's post, a delegation of USA officials will hold negotiations with the Chinese side.

That approach so far has amounted to slapping tariffs on US$250 billion (NZ$361 billion) of Chinese imports and vowing to impose penalties on all other imports if China doesn't make changes.

"I'm sure he will be deeply involved", Kudlow said on a call with reporters.

Donald Trump threatened to slap a range of import penalties on Chinese products if they didn't make major changes in their economic relationship with the US.

Beijing, for example, didn't mention the 90-day deadline for talks on a deal over technology issues.

At his political rallies and news conferences, Trump often praises the increase in US military spending during his almost two years in the White House. Let the negotiations begin.

"The two key events of roughly the last week have been the painkiller dose offered by [Federal Reserve chair Jay Powell] and the soothing market effects of the so-called US-China truce", the Financial Times cited the high-profile analyst as saying.

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