Trump extends China tariff deadline, cites progress in talks

US President Donald Trump with Chinese Vice Premier Liu He at the White House on Feb 22 2019

In his February 5 State of the Union address, Trump said a China trade deal "must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs".

"We're going to have another summit".

If the sides make further headway in negotiations, Trump said he and Xi planned to meet at his Mar-a-Lago resort in Florida to conclude an agreement, though he didn't offer any details on the timing of the meeting or how long he expects the tariff extension to last.

"So hopefully we can get that completed, but we're getting very close", he told governors during a business summit at the White House.

The Trump administration had been planning to escalate tariffs on $200 billion of Chinese goods from 10% to 25% this weekend if they were unable to broker a deal.

Dow Jones futures were rising by 0.6 percent.

Australia's S&P ASX 200 lost 0.9 percent to 6,128.40 as falling prices for oil and other commodities hit energy companies.

The president's cancellation of the tariff hike stirred worries among some supporters, who fear he will abort his confrontation with China and settle for a weak deal.

"I am pleased to report that the USA has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues", Trump wrote on Twitter.

The two sides have reached consensus on how to alleviate the trade imbalances, several Chinese government sources said.

"Trump has now substantially ratcheted up the pressure on his negotiators to strike a deal with China, even if it does little to assuage USA hard-liners' concerns about China's commitments on core structural issues", Cornell University Professor Eswar Prasad told the Wall Street Journal.

Weakness in both countries' manufacturing industries may be motivating the American and Chinese presidents to seek a deal, according to Pantheon Macroeconomics, a financial research firm.

Shares were mostly lower in Asia on Tuesday, backtracking from Monday's rally spurred by news that President Donald Trump had pushed back a deadline for raising tariffs on imports from China to allow time for more negotiations.

The two sides have been negotiating an enforcement mechanism.

As a result, he said: "I will be delaying the United States increase in tariffs now scheduled for 1 March".

The U.S. Tire Manufacturers Association did not comment on the delay, but said it continued to monitor the situation.

The question now is whether the trade deal between the two countries will amount to pledges from China to buy more American products, such as soybeans and liquefied natural gas, to narrow that gap, or whether the Trump administration can persuade Beijing to embark on painful structural reforms. The two also met at the end of talks during Liu's last visit to Washington in late January.

It's better than the alternative, which is to make production practically impossible here in the USA via the Green New Deal, incentivizing factories and growth elsewhere including China and making Americans even more dependent on imports.

The decision "seems to indicate that there's enough forward momentum that they believe they don't need to raise tariffs now", Parker said.

U.S. Senate Judiciary Committee Chairman Senator Chuck Grassley (R-IA) smiles as he discusses the confirmation vote for U.S. Supreme Court nominee judge Brett Kavanaugh as he exits the Senate floor on Capitol Hill in Washington, U.S., October 5, 2018.

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