As a result of last week’s meetings between President Trump and China’s President Xi Jinping, the two countries agreed to a mechanism to ease immediate trade tensions. The two leaders discussed and decided, while at Mar-a-Lago in Florida, that they would take a more transactional approach with trade negotiations producing results within 100 days. Such an approach could potentially help reduce the $300-billion U.S. trade deficit in the short term.
China said it is willing to end a ban on U.S. beef exports that has been in place since 2003 as a result of a mad cow disease found in Washington state. However, at this point, there is a number of steps remaining before U.S. beef could be exported to China and no specific timetable.
China is the second-largest beef buyer after rapid economic growth over the past decade created an expanding middle class that can afford more protein in their diets. A more open China would only increase those numbers. Last year, most of the beef exported to China was purchased from Brazil, Uruguay, Australia, New Zealand, and Australia.
China will also make concessions to give the United States better market access in financial sector investments. Currently, foreign investors cannot hold a majority stake in securities and insurance companies in China. China’s largest companies in these sectors, such ass Citic Securities and China Life Insurance have achieved enormous scale in the 15 years since China joined the World Trade Organization, making them formidable competitors for new entrants to the market. U.S. financial services companies have grown increasingly frustrated about what they say are rising barriers to doing business in China.
Although the talks were were overshadowed by a U.S. strike in Syria and a heighten nuclear threat out of North Korea, experts have said the meeting was a success given that both sides remained cordial, had an optimistic tone, and took a step towards tackling trade issues between the two countries. In addition, Trump accepted Xi’s invitation to visit China later this year. “We have a thousand reasons to get China-U.S. relations right and not one reason to spoil China-US relations,” Xi said.
For the short term, the threat of a trade war is on ice, but how this shakes out will depend on negotiations regarding the 100-day plan.
