Trump, Xi Agree To Resume Trade Talks, Truce A Likely Relief To Markets For Now

President Donald Trump and Chinese President Xi Jinping agreed to resume trade talks, and the United States will back down for now from a threat to impose more tariffs, easing, at least temporarily, the high-stakes multibillion dollar trade war that has made investors around the world nervous.

Stocks are likely to see at least a short-term rally after the Trump’s announcement of progress amid relief that further escalation of the trade war has been avoided for now.

"We're going to work with China where we left off,” Trump said after the meeting with Xi at the G-20 summit in Osaka, Japan.

Several observers noted, though, that markets may remain somewhat cautious because of unpredictable nature of the Trump Administration and the stop-and-start history of trade talks between the two countries.

Huawei

Trump also said the U.S. will resume allowing American companies to sell products to Chinese technology company Huawei, a central firm in U.S. complaints about China. Trump said, however, that only sales to Huawei in which national security won’t be compromised will be allowed.

Trump said American companies had complained about being barred from selling to Huawei under the blacklist and that he wanted to help them.

Chinese commercial practices are one of the major disagreements between the two countries – Washington alleges Chinese firms steal technology from American companies doing business there, and coerce foreign companies into divulging trade secrets. China denies the allegations.

What Was Agreed

The U.S. will postpone a threat to put new tariffs on another $300 billion in Chinese goods, “for the time being,” Trump said.

China agreed to restart purchases of American food and agricultural products. Trump said it was a “tremendous amount” of goods that would soon start flowing to China as a result of the talks.

Both leaders expressed optimism about the resuming negotiations and the nature of the two countries’ relationship.

"One basic fact remains unchanged: China and the United States both benefit from cooperation and lose in confrontation,” Xi said.

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President Donald J. Trump and President Xi Jinping | July 8, 2017 (Official White House Photo by Shealah Craighead)