The G-20 summit concluded in Buenos Aires on December 1 and brought relief to Chinese and American importers as the leaders from both nations mutually agreed to halt new trade tariffs for 90 days.

The press release issued by the White House reads that on January 1, 2019, tariffs on $200 billion worth of imported Chinese products will not be raised to 25% from the existing 10%, as was initially announced by the United States. In return, China agreed to purchase a substantial amount of agricultural, industrial, and energy products from the U.S., though the exact amount has yet to be agreed upon. This ceasefire aims to reduce the trade conflict that has steadily escalated in the recent months between the two countries.

Existing contention

The Trump administration inflicted import duties on aluminum and steel to the tune of 10% and 25%, respectively, in March of this year, thereby attracting Chinese retaliatory tariffs and igniting the era of the trade war. So far, the U.S. has imposed tariffs on $250 billion worth of Chinese goods. China answered by incurring tariffs on $110 billion worth of U.S. goods.

The 90-day ceasefire was established in order to negotiate contentious trade issues such as forced transfer of technology, intellectual property protection, non-tariff barriers, cyber intrusions, and cyber theft, according to the White House press release. If both parties fail to reach a consensus after this period, tariffs will be raised from 10% to the proposed 25% on March 1, 2019.

Promises of the ceasefire

U.S. President Trump tweeted his approval for the G-20 Summit meeting with President Xi, citing positive impacts for both the U.S. and China. The U.S. agriculture industry, especially the soy bean producers who were severely affected by the tariff rise, is set to get a relief from the promise of increased exports to China.

In accordance with the ceasefire, Chinese President Xi agreed to designate Fentanyl as a controlled substance. This decision comes in light of the opioid seemingly driving up cases of drug addiction and drug-related deaths in the U.S. Fentanyl is thought to be mostly made in and imported from China. President Xi also expressed his intention to approve the Qualcomm-NXP deal, provided it should be presented again for the approval. The U.S.-based company Qualcomm Inc., the world's biggest smartphone-chip maker, failed to forge a $44 billion merger with the Netherlands-based NXP Semiconductors, due to Chinese regulatory disapproval in June of 2018.

The task ahead

Though 90 days is a short period of time to reach a consensus on sensitive issues such as intellectual property theft and forced technology transfer between world’s largest trading nations, the delegations from each nation are exploring all available possibilities to fructify this short-term deal. The negotiating team from the U.S. and China are expected to continue meetings in mid-December.

If you want to learn more about the U.S.-China bilateral tariff ceasefire, read The Hindu - Business Line, and BBC.