The Trump-Xi truce questions that are leaving markets flummoxed


China's reticence contrasted with the parade of US officials talking about the deal on Monday, including Treasury Secretary Steven Mnuchin and White House Economic Adviser Larry Kudlow.

Dubbing himself "Tariff Man", President Trump on Tuesday suggested the 90-day trade truce he and Chinese President Xi Jinping agreed to at the G20 could be extended while a broader deal was negotiated.

Steven Mnuchin, the Treasury secretary, said that China had agreed to buy US$1.2 trillion of American products, but he could not offer specifics.

China only recently signaled that it may back off from its strict foreign ownership requirements for auto factories.

It also said China had agreed to start buying farm products from US farmers immediately.

"I'll call them "commitments" at this point, which are - commitments are not necessarily a trade deal, but it's stuff that they're going to look at and presumably implement", Kudlow told reporters at an official White House briefing that followed TV interviews and informal briefings by him and Mnuchin earlier in the day.

Trump recently voiced frustration with General Motors' decision to close a handful of North American factories, including a plant near an OH city where he promised voters that jobs would finally be coming back under his leadership. "But if not remember, I am a Tariff Man".

What is clear is that if no deal or further extension of talks is agreed upon by March 1, the US's tariffs on roughly $200 billion worth of Chinese goods will increase from the current 10% rate to 25%. Many Democrats and Republicans, as well as global leaders, have agreed with Trump's assessment, and he has taken an adversarial approach with Beijing, saying he believes this is the only way to force changes. Senior administration officials also had trouble articulating any specifics about the deal in press briefings.

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The announcement came as part of a 90-day halt in which the president will delay a scheduled tariff increase on China, Fox News noted. At the end of the day, two realities remain: the now an energy (oil and gas) producing super power alongside the ranks of Russian Federation and Saudi Arabia, while China, conversely, is the world's largest energy consumer, which gives it less leverage in ongoing trade and even geopolitical negotiations and developments.

Trump has argued that China for decades has abused global trade rules to lure away U.S. jobs, steal USA intellectual property, subsidise its own companies, and strong-arm United States firms.

If the stock market continues to slide and prospects of a deal with China prove fleeting, Congress may finally be motivated to take action against Trump's unilateral power to set trade policy. Even if that happens, there's no guarantee it would reduce the US$336 billion United States trade deficit with the Asian nation, as Mr Trump hopes to do.

No one's quite sure how Trump plans to get his way (and, in turn, pass on the cost of these tariffs to the USA people), but what's also grabbing attention is how Trump phrased one of his tweets.

The comments by the president and his top advisers over the past 48 hours have only added to China's confusion about their negotiating partners.

On Tuesday, the stock market plummeted in the wake of President Trump's troubling tweets about the possibility of a renewed trade war with China.

But Mnuchin said, "I think there's no question the president's tariff strategy has worked". "Bob Lighthizer will be working closely with Steve Mnuchin, Larry Kudlow, Wilbur Ross and Peter Navarro on seeing whether or not a REAL deal with China is actually possible". Let the negotiations begin.