Stocks surge on optimism about US-China trade talks

Evarado Alatorre
Octubre 12, 2019

US tariffs on $250 billion of Chinese imports are set to rise from 25 percent to 30 percent on October 15. British Prime Minister Boris Johnson and his Irish counterpart, Leo Varadkar, unexpectedly said they saw a chance of a Brexit deal.

Earlier Friday, Trump and other officials close to the US-China trade talks are indicating there was better-than-expected progress during the first day of high-level negotiations in Washington Thursday, causing stocks to buoy Friday morning in the hopes a deal would be reached.

Other issues, such as allegations over China's use of trade secrets, will be discussed in later negotiations, the AP said. In exchange, the USA agreed to hold off on tariff hikes that were set to take effect Tuesday.

China, meanwhile, said it would increase purchases of USA agricultural products.

President Donald Trump, speaking from the Oval Office, said negotiators had reached a "Phase 1" agreement that would take several weeks to write and that both sides could officially sign by November. In August, Trump delayed threatened tariffs against China, though he said he was doing so to limit the impact on Americans' holiday shopping, not as a good-will gesture to China. On Friday, he said the two sides would now work on a deal in phases, a reversal from his previous position that he was looking for a "complete" China deal, not an interim agreement.

But while Trump took a victory lap for what he called it a "substantial phase one deal", it will take weeks to finalize and the final details are not clear, nor will it roll back tariffs already in place on hundreds of billions of dollars in two-way trade.

China's Vice Premier Liu He leaves the trade talks that are being held in Washington.

Negotiators are drafting a truce in which China will buy $40-$50 billion in USA farm products in exchange for tariff relief. The Trump administration has accused China of manipulating the yuan lower to give its exporter a price advantage in foreign markets.

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In exchange, Trump said China agreed to buy as much as $50 billion of American farm goods.

The emerging deal, covering agriculture, currency and some aspects of intellectual property protections, would represent the biggest step by the two countries in 15 months to end a tariff tit-for-tat that has whipsawed financial markets and slowed global growth.

Equities had advanced globally earlier in the day amid growing conviction that the US and China would negotiate a trade truce.

Similarly, American Apparel and Footwear Association president and CEO Rick Helfenbein said the organization "welcomes the president's decision" but added that "the reality is that everything now being hit with punitive tariffs is still being charged".

Hirson said the two sides ultimately may not get through to phase two. That would tax virtually every good the US buys from China.

U.S. stock prices surged on Friday as markets continued to hear rumblings about a trade deal between the United States and China. The U.S. State Department also imposed visa restrictions on Chinese officials involved.

Ownership limits will be ended for mutual fund companies on April 1 and for securities firm on December 1, the China Securities Regulatory Commission said.

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