U.S., China Reach a Truce on Trade

China and the U.S. agreed to a cease-fire in a trade battle that has shaken global markets, with the U.S. postponing plans to increase tariffs on $200 billion in Chinese goods and the two sides entering negotiations on other contentious issues.

The truce between the U.S. and China emerged after a highly anticipated dinner Saturday between Trump and Xi on the sidelines of the Group of 20 summit in Argentina. The leaders agreed to pause the introduction of new tariffs and intensify their trade talks, Chinese Foreign Minister Wang Yi told reporters hours later in Buenos Aires.

“Both sides believe that the principled agreement reached between the two presidents has effectively prevented the further expansion of economic frictions between the two countries,” he said.

The White House called the meeting “highly successful,” saying the U.S. will leave existing tariffs on $200 billion of Chinese goods at 10 percent and refrain from raising that rate to 25 percent as planned on Jan. 1.

In exchange, the U.S. wants an immediate start to talks on Trump’s biggest complaints about Chinese trade practices: intellectual property theft, non-tariff barriers and cyber theft.

After 90 days, if there’s no progress on structural reform, the U.S. will raise those tariffs to 25 percent, White House Press Secretary Sarah Huckabee Sanders said in a statement.

China also agreed to boost its purchases of agricultural and industrial goods to reduce its trade imbalance with the U.S., she said.

“This was an amazing and productive meeting with unlimited possibilities for both the United States and China,” Trump said in the statement. “It is my great honor to be working with President Xi.”

Investors have been eager for signs of a progress toward keeping an already costly trade dispute from spiraling into a new and broader cold war. White House economic adviser Larry Kudlow said that the meeting went “very well” in a brief comment to reporters as the Trump delegation left Buenos Aires for Washington.

The outcome gives both sides enough to boast of a win without resolving the fundamental differences between them. China gets a delay on additional tariffs, while the U.S. gets greater purchases of agriculture goods while retaining leverage to push for more structural changes to the economy.

“Neither side got their maximum demands and it’s not the first time in U.S.-China relations that both sides claim victory,” said Michael Pillsbury, a senior fellow at the Hudson Institute and a defense official under presidents including Ronald Reagan and George W. Bush. “Both sides avoided the worst-case scenario.”

“My relationship is very special, the relationship that I have with President Xi,” Trump said as the two men were seated.

Through a translator, Xi said that “only with cooperation between us can we serve the interest of global peace and prosperity and that is why I look forward to this meeting.”

The meeting was the first face-to-face encounter between the leaders in more than a year, a period that saw Trump impose tariffs on billions of dollars in Chinese imports in a bid to force Beijing to halt trade practices the U.S. considers unfair. Trump had warned that a disappointing outcome could prompt more U.S. tariffs.

In other key results from the talks, the U.S. promised to uphold the one-China policy, Wang said, while China threw its support behind further meetings between Trump and North Korean leader Kim Jong Un.

The White House said that Xi would consider approving a possible $44 billion deal for Qualcomm Inc. to purchase NXP Semiconductors NV if it’s brought to him again.

It also said China agreed to designate the synthetic opioid fentanyl, which has been linked to an epidemic of overdose deaths, as a controlled substance — a move that would expose its sellers to the maximum penalty under Chinese law.