The outline for a limited trade deal was announced on Friday between the U.S. and China which involves the U.S. postponing increasing tariffs on $250bn of Chinese goods from 25% to 30%, which was scheduled for October 15. In return, China agreed to increase agricultural purchases and make some modest concessions on access to its financial markets and curbs on intellectual property theft. The December tariff hikes were not addressed and no concessions were made on Huawei.
By all accounts, trade discussions between the U.S. and China last week were a positive step, with at least temporary de-escalation of trade tensions. However, President Trump’s characterization of what was agreed to following the talks were significantly different from what was reported by China’s official Xinhua news agency. President Trump claimed that the two sides had reached a “substantial phase-one deal” while reports from China were much less committal, indicating only “substantial progress achieved.” Importantly, there was no agreement in writing which limited the market response to the news.