Asian Shares Rise After Trump Delays Tariff Hike
Asian shares have jumped after US President Donald Trump announced he will meet with Xi Ping to conclude an agreement ending the trade standoff between China and the US.
“I am pleased to report that the US has made substantial progress in our trade talks with China,” tweeted Trump on Sunday evening. He mentioned that progress had been made on “structural issues, including intellectual property protection, technology transfer, agriculture, services, currency and many other issues.”
Trump was planning to increase tariffs on Chinese imports into the US from 10% to 25% on March 1 if the two countries did not reach an agreement by Friday. The increase would affect $200 billion worth of Chinese goods. The delay is likely to calm volatile financial markets and reassure business owners who depend on China.
Since the news, Asian shares have reached their highest point in the past five months. Chinese markets saw significant gains, with the stock market soaring by 5%. The Shanghai composite jumped by 5.6% to 2,961.28, taking this year’s gains to over 20%. Meanwhile, the Shenzhen component increased by 5.5% to 9,134.58 whilst the Shenzhen composite rose by 5.4% to 1,557.27. Elsewhere in the region, the Nikkei in Tokyo rose by 0.5% and the Kospi in Soeul climbed 0.45%. The Australian dollar also benefited.
China’s official Xinhau news agency echoed Trump’s comments, stating that both sides “came a step closer by realizing the important consensus reached” by Xi Jiping and Trump when both parties agreed to a trade war truce. China and the US agreed to halt trade tariffs for 90 days to allow for talks in December following months of hostile tariffs imposed between the two countries. China had accused the US of starting “the largest trade war in economic history.”
The announcement to delay the tariffs comes after days of negotiations between American and Chinese officials in Washington. “The high frequency engagement between Beijing and Washington at a senior level implies that both sides are looking for some form of settlement,” Tai Hui, Chief Market Strategist Asia Pacific at JP Morgan Asset Management told The Guardian.
Trump’s decision to delay tariffs suggests a breakthrough in talks between Washington and Beijing. Trump’s administration has been in discussions with Beijing for months in an attempt to persuade China to make structural changes to its economy. Trump has been critical of China for undercutting American workers. By imposing tariffs, he wanted to make US-made products cheaper than imported ones, encouraging consumers to buy American.
However, both sides are still to sign an official agreement and few details have been revealed regarding the measures of such an agreement. Some analysts believe that Trump’s advisors may have secured greater concessions than previous administrations, whilst others question whether the US can really transform its economic relationship with China.
Nonetheless, Trump’s optimism is clear: “if all works well, we’re going to have some very big news over the next week or two,” said the President. Trump and Xi Jiping plan to meet in Florida in the near future.
By Amy Jones