Business Lobby: Xi G20 Meeting to Help Prevent Trade War Escalation

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Auto stocks .SXAP , which have been battered by fears of rising tariffs, jumped 4.2 percent after Trump said that China had agreed to cut import tariffs on American-made cars.

Chinese President Xi Jinping and Trump negotiated the agreement during a discussion to quell an escalating trade war while at the G20 summit in Buenos Aires, Argentina.

There are several significant take-aways from this development, including the argument that Trump's hard line, even at times belligerent stance with Beijing, has caused them to blink first, particularly since economic growth in China has already started to feel the brunt of USA tariffs, while US economic growth, though not as robust as a few months ago, is still strong.

USA company Tesla saw its sales drop with the higher prices this fall and recently said it would absorb some of the higher tariff costs and no longer pass them on to consumers.

"The consensus reached by the leaders of our two countries is to halt the imposition of new tariffs and at the same time the two sides' leaders instructed the economics teams of both sides to intensify talks towards the removal of all tariffs that have been imposed", Geng told a daily news briefing. "I think that's going to be a very primary reason we'll probably end up getting something good for China and good for the United States".

While we had expected a ceasefire and a framework for further negotiations from the G-20 meeting, holding tariffs at 10% is better than expected.

Trump even failed to produce the most-commented-upon moment at the meeting; that belonged to the grinning fist bump between Russian president Vladimir Putin and Saudi crown prince Mohammed bin Salman, when the two men met Friday.

"They can not slow walk this, stall this, meander this". By midyear, soybean exports to China were down by 20.5%, according to CNBC.

In return, China is to purchase "very substantial" amount of agricultural, energy, industrial and other product from the US.

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In exchange, the two countries agreed to re-start talks on the USA concerns that triggered the dispute, including "forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft", according to the White House.

In China, Hong Kong's Hang Seng index and Shanghai Composite were up more than 2% in early trading, while Japan's Nikkei 225 rose more than 1%.

The U.S. LNG sector also needs Chinese participation, however.

"If they cancel the extra 25 percent tariff on USA -made cars, then we will see positive signs for imported cars", said director of the China Automobile Dealers Association's import committee, Wang Cun, according to Reuters.

The appointment of Lighthizer may signify a harder line in talks with Beijing and marks a shift from past practices where Mnuchin had a lead role.

Trump also said he would shortly be providing formal notice to Congress that he will terminate the North American Free Trade Agreement, giving lawmakers six months to approve the replacement he signed Friday.

The White House is stepping up efforts to prod other countries to build more vehicles in the United States.

The automakers had a previously scheduled meeting with the trade representative yesterday, two people briefed on the matter told reporters. Federal data released last week says more than 70,000 people died of drug overdoses a year ago, and the rate of fatal overdoses involving synthetic opioids like fentanyl increased by 45% between 2016 and 2017.

The meeting between Xi and Trump on December 1 turned out better than expected.