One dinner has resulted in two messages. The ceasefire agreement in the U.S.-China trade war is a “Xi said, Trump said” situation.
After what both sides called a “highly successful meeting” in Buenos Aires, U.S. and China put out separate statements, rather than a joint one to discuss the outcome. “That arrangement allowed both to describe the unwritten ‘deal’ in their own words, based on their own perceptions and recollections,” Carl Weinberg, chief economist at High Frequency Economics, wrote in a note on Sunday.
While both Beijing and Washington claimed major progress in the meeting that avoid further escalation for now, some significant differences stand out as the two countries communicated the results.
Tariffs:
China: “The two heads of state reached a consensus on not imposing new additional tariffs, and instructed the economic teams of both countries to intensify consultations and step up negotiations toward the removal of all additional tariffs that have been imposed this year, and reach a concrete deal that is mutually beneficial and win-win.”
U.S.: “On Trade, President Donald Trump has agreed that on January 1, 2019, he will leave the tariffs on $200 billion worth of product at the 10% rate, and not raise it to 25% at this time. Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%.”
China didn’t mention the deadline of 90 days. It also makes the situation sound more optimistic as it aims to eliminate all the additional tariffs imposed by Trump earlier this year. China has shown a commitment to future negotiations but also emphasizes any deal must be mutually beneficial.
Trump also tweeted Sunday night that China has agreed to remove tariffs on imported cars from the U.S. No announcement from the China side so far. In July, China raised the tariffs on American-made cars to 40% during the tit-for-tat dispute with Washington, while it slapped tariffs on other imported cars to 15%.
Buying U.S. goods:
China: “China is willing to expand imports according to the needs of the domestic market and the people, including the purchase of marketable goods from the U.S., and gradually ease balances in two-way trade.”
U.S.: “China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately.”
“This says nothing was actually agreed upon,” Weinberg of High Frequency Economics pointed out the wording of “will agree” in the White House statement. China has long pledged to expand import, but doesn’t specify what they will buy from the U.S. in its own statement. “There is no good news for U.S. farmers in this ‘deal’,” Weinberg wrote.
Technology transfers and IP protection
China: No mention of intellectual property protection and technology transfer.
U.S.: “President Trump and President Xi have agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.”
This has been a sticky point of the China-U.S. trade talks. U.S. Commerce Secretary Wilbur Ross told Yahoo Finance that the main problem with China is not tariffs, but the invasion of intellectual property rights, forced technology transfers and espionage, which makes the negotiation much harder. But it’s something China is not even willing to admit. After the “fruitful meeting,” China still doesn’t want to address the issue publicly.
Krystal Hu covers technology and trade for Yahoo Finance. Follow her on Twitter.
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