U.S. President Donald Trump and his Chinese counterpart President Xi Jinping met at the G-20 Summit in Osaka Saturday morning, and reached an agreement that would allow the two countries to restart negotiations connected with their year-long trade war.
Trump said at a news conference that negotiations between the two are “back on track.” But just how long the new truce will last is unclear, given the unpredictable pattern of talks over the past year between the two countries. What remains a key issue for the U.S. is the protection of intellectual property rights.
With no other details available, it wasn’t immediately clear what were the actual terms of the agreement. However, Trump did say following the G-20 Summit that he would delay plans to impose a 25 percent tariff on $300 billion of Chinese imports.
Those tariffs, for goods referred to as Tranche 4, were expected to be imposed on merchandise coming into the U.S. at the end of the summer. Trump also said he would hold off on any restrictions against China’s largest telecommunications equipment maker, Huawei Technologies Co. Relaxing restrictions allows U.S. companies to again sell to the equipment maker.
And while U.S. companies can sell their parts to Huawei, it seemed that the ban on imports of Huawei equipment for new 5G wireless networks was still in place. The U.S. has said the equipment could be used for espionage purposes, and the Commerce Department last month placed Huawei on a blacklist for national security reasons, it said. In turn for the Huawei concession, China is expected to increase its purchasing of U.S. agricultural goods.
While having the truce in place gives apparel firms and retailers some breathing room–particularly for the upcoming back-to-school season and early deliveries of fall and holiday merchandise–companies still need to continue executing their what-if plans. That’s because until there’s an official agreement that decisively resolves the trade war, there’s always a possibility that the U.S. or China could rescind the truce, paving the way for the Tranche 4 tariffs to go into effect.
The National Retail Federation, shortly after the truce was announced, said it hoped that progress made during talks between the American and Chinese leaders will hasten the trade war’s conclusion.
David French, senior vice president for government relations at NRF, said, “Pulling back from the brink of further tariff escalation is a good sign for retailers and their customers, and we look forward to continued progress in the talks with China so that further tariffs can be avoided and existing ones lifted.”
French reiterated that a tariff would punish American consumers and threaten U.S. jobs. A report prepared for the NRF indicated that implementation of the new Tranche 4 tariffs would cost Americans $4.4 billion each year for apparel and $2.5 billion for footwear.