WASHINGTON, D.C. — The dinner table diplomacy that Presidents Donald Trump and Xi Jinping of China conducted over the weekend produced something as vague as it was valuable: an agreement to keep talking.
Forged over grilled sirloin at the Group of 20 summit Saturday in Buenos Aires, Argentina, the economic ceasefire Trump and Xi agreed to Saturday night illustrated that the leaders of the world’s two largest economies can at least find some common ground, however tentative and ill-defined it might be. The truce pulled the United States and China back from an escalating trade war that was threatening world economic growth and had set global investors on edge.
However, a lack of detail on the agreement set markets into a dip Tuesday.
White House officials have struggled to explain whether China has really agreed to drop its 40 percent tariffs on U.S. autos. Treasury Secretary Steven Mnuchin said Tuesday on the Fox Business Network that China agreed to buy $1.2 trillion of U.S. products, but added, “if that’s real” it would close the trade deficit with China and said “we have to have a negotiated agreement and have this on paper.”
Still, analysts believe that what Trump and Xi achieved was the gift of additional time — 90 days, at least — to try to resolve the thorny and complicated issues that divide them. Most important among them, and perhaps the most intractable, is the U.S. argument that Beijing has deployed predatory tactics in a headlong drive to overtake America’s global supremacy in high technology.
Yet reaching a permanent peace will hardly be easy. The Trump administration asserts, and many experts agree, that China systematically steals trade secrets and forces the U.S. and other foreign countries to hand over sensitive technology as the price of admission to the vast Chinese market.
This year, Trump imposed an import tax of 25 percent on $50 billion in products, then hit an additional $200 billion worth of goods with 10 percent tariffs. Those 10 percent tariffs were scheduled to ratchet up to 25 percent on Jan. 1 if the United States and China failed to reach an agreement to at least postpone that move.
In Buenos Aires, they did reach such an accord. Trump agreed to delay the scheduled U.S. tariff increase for 90 days while the two sides negotiate over the administration’s technology-related complaints. In return, China agreed to buy what the U.S. products mentioned by Mnuchin, to help narrow America’s gaping trade deficit with China. If the Chinese did eventually increase such purchases, it would be warmly welcomed in the U.S. Farm Belt, where producers of soybeans and other crops have been hurt by Beijing’s retaliatory tariffs.
Beijing cut import duties on foreign autos to 15 percent in July but added a 25 percent penalty for U.S.-made vehicles the following month in response to Trump’s tariff hikes.
But can China be trusted? Its contentious tech policies lie at the heart of its economic vision, and Beijing could prove reluctant to sacrifice its ambition, no matter what longer-term agreement with the United States it eventually reaches.
“Make no mistake about it: The issues that we have with China are deep structural issues, and you’re not going to resolve all of them in 90 days or even 180 days,” said Dean Pinkert, a former commissioner on the U.S. International Trade Commission and now a partner at the law firm Hughes Hubbard & Reed. The Trump administration is “going to have to decide how much progress they need in order to define it as a win.”
Even so, the Buenos Aires breakthrough may calm investors who worried about financial damage from the trade hostilities. Caterpillar, Ford and other U.S. corporate giants have complained that the higher Trump tariffs, if kept in place, would guarantee higher costs and lower profits.