"For the time being we won't be lifting tariffs on China," Trump told reporters on Saturday, indicating that he does not plan to raise levies. "We will work with China. They are going to negotiate and start spending money."
Chinese state media also reported that a ceasefire in the trade war had been settled. The world's two biggest economies have agreed to restart trade talks, Xinhua News said, adding that the two sides will discuss "specific" issues.
Trump also appeared to do a U-turn on his policy toward Huawei Technologies. In May, his administration banned the sale of high-tech components and software to Chinese companies, including the tech giant, by including them on what Washington calls its "entity list."
But on Saturday he said U.S. companies could continue to sell to Huawei.
"We have a lot of companies in Silicon Valley, we are letting them sell to Huawei," Trump said, adding that he would leave the issue "toward the end" of trade talks.
The two leaders met for the first time in nearly seven months on Saturday, again on the sidelines of a global meeting, in an attempt to turn the heat down on a boiling trade war.
Trump is angry at the trade imbalance between the two countries, and has imposed rounds of tariffs on goods the U.S. imports from China. China retaliated by raising tariffs.
As the bilateral meeting began, Xi said he is prepared to exchange his thoughts and that he hopes to set the direction of China-U.S. relations "based on coordination, cooperation and stability."
Trump responded by saying, "It would be historic if we can do a fair trade deal."
China-based manufacturers have welcomed the news of a truce in the year-long trade war between Washington and Beijing, with a freeze on further tariffs.
President Xi Jinping and his US counterpart Donald Trump confirmed the deal –
in the week – on the sidelines of the Group of 20 summit in Osaka on Saturday. The US will put on hold new duties on US$300 billion of Chinese goods, and the world’s two biggest economies will restart trade talks.
Trump also offered to ease restrictions on Chinese telecoms firm Huawei Technologies. In return, Beijing agreed to buy more US products to reduce the trade deficit.
But manufacturers were still concerned for their business prospects, given the volatility of the situation, uncertainty over how solid the truce was, and the fact that a 25 per cent tariff remained on US$250 billion of Chinese goods.
“It gives me hope that we can deliver these products without having to re-source,” said Timothy Stuart, director of Unit Bricks, a toymaker that exports 80 per cent of its products to the US.
The moratorium on tariffs means Stuart can continue to use his existing supply chain.
“Effectively, it keeps my business alive and keeps children educated,” he said.
Unit Bricks predominantly uses two major factories in Fujian and Shandong provinces to make its products. There are no US tariffs on the company’s exports at the moment, but had the next round of tariffs on an additional US$300 billion of Chinese imports been deployed, the company’s products would be subject to a levy of up to 25 per cent.
“We looked at potentially moving production back onshore to the United States, but that is not cost-effective. China is our best option, we prefer to stay there. If it comes to plan B, we might be forced to move production, but I don’t know where,” Stuart said.
Although there was no ideal destination for relocation, if the new round of tariffs were implemented, the company would “move, 100 per cent, for sure”, Stuart said.
Hu Chao, assistant general manager at manufacturer Yongkang Sunyee Industrial, also welcomed the truce, saying it would “boost confidence”. The Zhejiang-based company produces all-terrain vehicles and motorcycles. Exports of those vehicles to the US have been subject to a 25 per cent tariff since July last year. Sunyee had just completed all the paperwork to export to the US when the trade war started.
“We just managed to enter the US market, which has huge potential for us. We had projected orders from the US of about US$2 million a year, but [the buyers] cancelled the orders when the trade war broke out,” Hu said.
Trump and Xi’s meeting in Osaka put the finishing touches to a deal which had been in the works for almost a fortnight, after a dramatic break-off in talks in early May. On Monday, US Trade Representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin and Chinese Vice-Premier Liu He, Beijing’s chief negotiator, discussed the broad outline of the Trump-Xi trade agenda by phone.
On Friday, other G20 leaders had urged the world’s two largest economies to settle their differences because the trade war posed a risk to the global economy and risked dragging other nations in, too.
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