Trump Suspends Chinese Tariff Increase After Weekend Talks

Chinese officials were in Washington at the end of last week and extended talks over the weekend in an effort to hammer out a deal by the March 1st deadline this week.

While little has been released regarding the details of the discussions, risk sentiment was buoyed by Trump’s comments on Twitter describing the talks as “very productive.”

Talks were reportedly extended to address issues such as changes to be made to China’s treatment of state-owned enterprises, subsidies, forced technology transfers, and cyber theft.

Trump Praises Progress Made in Talks

Once again, writing on Twitter late last night, Trump said that it was “a very good weekend for US & China” with both sides making “significant progress.”

Indeed, Trump went as far as to say that there could be “very big news over the next week or two” if negotiations go well. He added that he is open to meeting Chinese premier Xi Jinping if “additional progress” is made.

Deadline Extended

The biggest reaction came in response to Trump’s announcement that he had decided to extend the March 1st deadline to allow for further negotiations. Trump said:

“As a result of these very …. productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”

Chinese Stocks Explode

With the original March 1st deadline now extended, the increase of tariffs on $200 billion of Chinese goods from 10% to 25% will be postponed.

This should keep risk assets bid in the near term as the market awaits further details. Indeed, Chinese stock markets saw explosive rallies in response to the news.

The CSI 300 index saw its best single-day gain since 2015. Many stocks saw suspended trading after exceeding the 10% gain limit which is set by Chinese regulators to cap single day price moves.

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