President Trump and Chinese president Xi Jinping reached an agreement to momentarily halt the placement of tariffs on each country’s goods at the G20 summit at Buenos Aires on the first day of December. The agreement will last until March 31 when a new agreement will be created to finalize each country’s stance on the tariffs. This was after a trade war was started by the escalating tariffs placed on important products, each in response to the other country. The announcement can be seen as a ceasefire, until a treaty of sorts can be met.
While the United States agreed to hold off on new tariffs, keeping the current tariff rate at 10 percent, China has agreed to buy significant amounts of United States agriculture, industry and energy products and would lower the tariffs on consumer automobiles.
Both countries agreed to open up their markets to each other’s investors as well. Beijing also agreed to designate fentanyl, a powerful opioid, as a controlled substance, which Trump referred to as “a wonderful humanitarian gesture.”
The future certainly seems hopeful in U.S and Chinese economic relations, and that hope is something each country needs in the face of economic uncertainty. China ended 2018 with a 28 percent loss in shares, the worst out of any country in the world. It has had its economic growth drastically slow down, to the point where Chinese officials injected $200 billion into its financial system to temporarily pay off loans.
The impact of Trump’s tariffs and a dwindling Chinese economy can be seen in big companies, like Apple. Tim Cook, Apple’s CEO, sent out a letter to investors explaining why revenue had fallen since the first time in 2002. Cook blamed a slowing Chinese GDP and trade tensions for weak share performances. Companies such as Ford and General Motors have had share drops and lower sales.
Trump’s tariffs scared the Chinese economy. The Chinese Academy of Social Sciences estimated the Chinese GDP would fall to 6.3 percent this year, a decline of 0.2 percent, showing that 0.2 percent of China’s population isn’t spending. A reduction in China’s economic growth resulted in lower projections for many American companies. While the tariffs certainly are not the only reason why the problems of each country exist, it seems the trade war had to be halted so that each country could try to repair their economies.