World

China-US Agree To Abandon Trade War, Beijing Increases Imports From America

DIVYIA ASTHANA | 0
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| May 20 , 2018 , 11:40 IST

The trade war heating up between the globe's economic giants, the US and China, appeared to be cooling down in April, but has now been officially abandoned, a statement from the Chinese Vice-Premier confirmed on Sunday.

"The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other," said China's Vice Premier Liu He to state-run news agency Xinhua.

China has also reportedly agreed to “significantly increase” its purchase of American goods and services to reduce the nearly $375 billion trade deficit with the US.

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After the second round of talks in Washington, the two sides issued a joint statement on Sunday vowing not to launch a trade war against each other.

“There was a consensus on taking effective measures to substantially reduce the US trade deficit in goods with China,” the joint statement said.

“To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services,” it added.

US President Donald Trump has reportedly threatened punitive measures against Chinese goods if China does not reduce the trade deficit by $100 billion in a month $200 billion by 2020.

According to the US, there is a trade deficit of $375 billion trade deficit in $636 billion total trade last year while China has pegged the deficit at around $200 billion.

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However, the two sides have agreed on meaningful increases in United States agriculture and energy exports for which the US will be sending a team to China to work out the details.

The decisions were made after a series of meets between the US delegation which included Secretary of the Treasury Steven T Mnuchin, Secretary of Commerce Wilbur L. Ross, and United States Trade Representative Robert E. Lighthizer and the Chinese delegation led by Vice Premier Liu He, the Special Envoy of President Xi Jinping.

The escalating trade war between US and China began when US has ordered import tariffs on $50 billion in Chinese goods, to which China responded by ordering tariffs on $3 billion of US imports. US next imposed tariffs on steel and aluminium imports from China, and China imposed tariffs on 128 US products. Most recently, US announced tariffs on 1,300 Chinese goods, which led to China imposing tariffs on 106 US products.

On April 6, Trump instructed trade officials to "consider whether $100 billion of additional tariffs would be appropriate."