The Trump-Xi truce questions that are leaving markets flummoxed

The Trump-Xi truce questions that are leaving markets flummoxed

In dealing with China so far, Trump has lived up to his self-ascribed reputation as a "tariff man".

Global investors, who had feared for months that a protracted trade war could hurt economic growth, seemed to cheer the cease-fire on Monday, but United States markets slid back on Tuesday as it became clear that there were few concrete commitments that came out of the discussions so far. "Chad Bown, a trade expert at the Peterson Institute for International Economics, estimates that 12 percent of US imports were covered by tariffs in September". Shares of major USA banks also took a dive with Citigroup, Morgan Stanley and Capital One bottoming out at 52-week lows. White House economic advisor Larry Kudlow said the figure was a broad benchmark that would depend on private transactions for USA goods and was subject to market conditions. The existing tariffs are already doing damage, the US Federal Reserve's rate rises and greatly-reduced purchases of US bonds and mortgages are draining stimulus from the economy and the impact of Trump's tax cuts is waning even as the legacy of those cuts and Trump's big surge in spending is showing up in swollen government debt and deficits.

Since a great deal of social media simply cannot look away from these tweets, you can guess what happened next.

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". Chuck Grassley (R-Iowa), chairman of the Senate Finance Committee, has suggested to Axios that he would support legislation that limits the president's ability to impose tariffs.

China, for its part, also agreed to offset its massive trade imbalance with the U.S.by buying more, but not yet specified amounts, of energy products, agricultural, industrial and other products.

"If it is, we will get it done", Trump wrote in a Twitter post.

President Donald Trump's dinner with Chinese leader Xi Jinping yielded a ceasefire in the trade war between the world's two biggest economies, though the details are proving less than satisfying to those hungering for a lasting truce.

That means the death penalty, by the way, but anyhow, here's what China's Foreign Ministry said, again more vaguely: "China has made a decision to list all the fentanyl-like substances as controlled substances and start working to adjust related regulations". "Unless extended, they will end 90 days from the date of our wonderful and very warm dinner with President Xi in Argentina", Trump said on Twitter.

Following the Trump-Xi talks, which took place over dinner at the end of the G20 summit, Washington agreed to hold off on Trump's threat to slap 25 per cent tariffs on United States dollars 200 billion worth of Chinese goods from January 1, leaving them at the current 10 per cent rate.

Another senior White House figure, trade adviser Peter Navarro, said only that the issue "certainly came up" in discussions at the G20.

While Trump hailed the agreement with Xi "an incredible deal", a lack of detail from the Chinese side has left investors and analysts wondering if Trump's exuberance is warranted.

Confusion has also arisen over when the agreed 90 day period for negotiations will kick in, with some saying it begins now, others claiming it's January.

The White House said talks would take place to resolve within the next 90 days specific U.S. complaints such as forced technology transfer, or else existing 10 percent tariffs would go up to 25 percent. "This agreement is a short-term alleviation of trade tensions, but we caution that this is a reprieve rather than a resolution".

FBN's Charlie Gasparino on President Trump's trade policy.

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