Good news followed on the meeting between US President Donald Trump and Chinese President Xi Jinping at the G20 meeting in Argentina.
If you’ve been reading The Australian Tribune, this shouldn’t come as any great surprise. We’ve been writing for weeks that we expected the two men to reach a working agreement at the Summit.
On Friday we ran the following headline, ‘Why the Trade War Could End This Weekend’.
‘US President Donald Trump has been subtly signalling he may be ready to make “a great deal”, while he continues to threaten imposing broader tariffs. And Chinese President Xi Jinping cannot afford any more headwinds to China’s already slowing growth.
‘With that in mind, a deal looks more likely than most mainstream sources are reporting.’
Indeed, this deal has come to pass.
Tired of paying more tax, year after year and decade after decade? Find out what you could do to help stop Australia’s already-crushing tax burden blowing out even further this year. Click here to download our latest research report free.
Trade dispute resolved at G20 summit
It was at Trump’s scheduled dinner on Saturday with Xi Jinping at the G20 summit that the long-awaited breakthrough took place.
As RAW reports, the increase on the current US$200 billion (AU$273 billion) tariff threat to 25% — which the US was planning to impose on China come 1 January — is no longer on the cards. In return, Trump claims Beijing agreed to purchase a ‘tremendous amount of agricultural and other product’ from the US.
A White House statement revealed that China is also willing to approve a deal for the acquisition of Netherlands-based NXP Semiconductors by US smartphone chip-maker company Qualcomm Inc.
This US$44 billion acquisition deal was knocked back in July because — as it was in the midst of this trade dispute — Qualcomm couldn’t get Chinese regulatory approval. However, Saturday’s meeting has confirmed that China will OK the acquisition ‘should it again be presented’.
Xi also agreed to designate the drug fentanyl as a controlled substance. Trump has been concerned with the synthetic opioid for the past year. The drug was being sent from China to the US and was causing an epidemic-like amount of opioid-related deaths.
Aboard Air Force One on his trip back to Washington from the summit in Argentina, Trump was nothing but proud of the negotiation between the two nations. He told reporters:
‘It’s an incredible deal…What I’d be doing is holding back on tariffs. China will be opening up. China will be getting rid of tariffs.’
And with Beijing’s agreed agricultural purchases, Trump is confident ‘it’ll have an incredibly positive impact on farming’.
It’s clear both leaders are thrilled with the outcome of their meeting. And for good reason.
Why the trade war had to end
State Councillor Wang Yi, the Chinese government’s top diplomat, said at the G20 summit that he felt the agreement ‘effectively prevented the expansion of economic frictions between the two countries.’
‘Facts show that joint interests between China and the United States are greater than the disputes, and the need for co-operation is greater than frictions.’
He certainly isn’t wrong.
With the reduction in Chinese imports of produce like soybeans, US farmers have been struggling.
As such, it was imperative for Trump to find a way to alleviate the tension…even if that meant playing a few rounds of hard ball.
In September, Trump placed a 10% tariff on US$200 billion dollars in Chinese goods. China retaliated with their own round of tariffs. Round one.
Trump threatened to impose tariffs on an additional US$267 billion of Chinese imports. China began taking US goods from travellers’ bags upon arrival back in their country. Round two.
In the meantime, US companies and consumers were faced with higher prices to account for these necessary tariff threats. It was all getting too much.
Come the G20 summit. Third time’s a charm.
It truly looks to be set in stone. The White House have even said that if their official agreement regarding all forms of trade issues between the two nations — including technology transfer, intellectual property, non-tariff barriers, cyber theft and agriculture — hasn’t been met in 90 days, both parties have agreed that the current tariffs will be raised to 25%.
And nobody wants that.
And so even after copping the brute of the naysayers, who insisted ‘the president will be attacked by Democrats, and some Republicans, for talking a huge game on China but instead being played’, Trump pulls out the winning move.
Indeed, the self-proclaimed ‘master of the deal’ really has proven his worthiness, living up to his title despite the efforts of his opponents to hamstring him.
Well played, Mr Trump.
PS: The tax burden on Australians has grown by leaps and bounds in our lifetime, and shows little sign of reversing. You may think you know who’s responsible for rising taxes. But as we reveal in our free new report — ‘What you could do to stop Australia’s Tax Freedom Day from blowing out even further in 2018’ — you may have it all wrong…Click here for more.