Stocks Surge After Trump Delays Tariff Increase

Trump to delay China tariff hike due to 'substantial progress'

Trump to delay China tariff hike due to 'substantial progress'

With the March 1 deadline approaching, the US and China have reportedly started to sketch out the broad outlines of a deal, although the tough work lies ahead.

Tariffs on a wide range of Chinese imports into the United States were set to rise from 10 per cent to 25 per cent this Friday. "And if we don't resolve some of these perennial problems now, then the question is what could happen in the future that would allow us to resolve them, when we couldn't resolve them today?"

The source familiar with the talks played down the apparent tension between the top trade negotiator and the president, saying Trump, a former NY businessman, had viewed MOUs from a real estate perspective, while Lighthizer had done so from a trade perspective.

But the cracks in the global economy, the stock market turmoil in the fourth quarter, Trump's flagging approval rating, and the pressure from the onset of the 2020 presidential campaign seem to have all combined to change Trump's thinking. David Lampton, director of China studies at Johns Hopkins University, talks to CBC's Wendy Mesley about China's growing economic influence.

Democrats in Congress were more pointed, saying Mr Trump should be prepared to walk away from a bad deal.

US markets also pointed to a lower open.

Trump said on Friday there was a "good chance" a deal would emerge.

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Lighthizer is known as one the fiercest critics of China's predatory mercantilism in the administration, second only to White House trade adviser Peter Navarro in his skepticism of China's intentions and ability to arrive at a satisfactory agreement with the U.S. In the past, he has said that tariffs might need to rise to 25 percent from the current ten percent before China would make serious concessions, according to people familiar with the matter.

Trump's decision to delay the tariff increase has been greeted with a mixture of relief and dread among USA industry groups and lawmakers, many of which are increasingly fed up with what they say is China's failure to live up to its World Trade Organization commitments. The Shanghai Composite surged 5.6 percent on Monday. Another source briefed on the talks said that enforcement remained a major sticking point as of Saturday.

"We're going to have a signing summit, which is better still".

Some have expressed concerns that after almost eight months of tit-for-tat tariffs roiling global financial markets, disrupting manufacturing supply chains, and shrinking US farm exports, Trump could end up settling for a deal that increases commodity sales to Beijing while doing little to change China's underlying trade practices and industrial policies.

The trade war has contributed to investors' wariness about the markets and concerns about a slowing global economy.

The flip side, from Trump's perspective, is that a trade truce could push up oil prices.

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