Wall Street hits records on news of U.S.-China trade deal

Andrew Cummings
December 13, 2019

But they continue to disagree about the amount of USA farm products that China should buy, as well as how they should peel back the tariffs they've imposed.

Despite false dawns in the past, the hint that a deal was in prospect had an immediate impact on share prices, with the broadly based S&P 500 index hitting a record intraday high of 3,176.28 in early trading in NY.

"Getting VERY close to a BIG DEAL with China".

China's government says negotiators are in "close communication" with Washington ahead of a weekend deadline for a US tariff hike. The indexes had slipped from record levels two weeks ago.

Share prices rose because Wall Street believes a breakthrough in the trade talks will remove one of the most important barriers to faster global growth in a year when Trump will be battling for re-election.

The United States has also agreed to reduce some tariffs on Chinese goods as part of the deal, Reuters reported quoting a US source familiar with the situation.

Mr Trump provided a strong hint overnight that he was close to signing a trade deal with China.

Sunday is a crucial date.

In addition to existing tariffs, Trump had threatened to impose a 15% levy Sunday on around US$160 billion of Chinese exports, including popular United States consumer goods like electronics and clothing.

A Ministry of Commerce spokesman on Thursday gave no indication of possible progress in trade talks or whether Washington might postpone the increase.

Either Lighthizer and Chinese Ambassador to the U.S. Cui Tiankai could sign the deal Friday, The Washington Post reported. China also said that it will reinstitute an additional 25% tariff on US-made vehicles and 5% tariffs on auto parts that had been suspended at the beginning of 2019.

"This one seems a little bit more tangible than some of the previous ones, but I still think investors are wise to wait ... for something actually being signed."
Tariffs were slapped on tens of billions of dollars worth of Chinese goods, including clothes, toys, phones and laptops.

China and the United States agreed in October to conclude a preliminary trade agreement, but Beijing is balking at US demands that it promise to buy a specific amount of agricultural goods.

While the White House gathering may highlight continuing divisions over whether to hit Beijing with a new wave of tariffs, Trump's tweet suggests he may be willing to forego escalation for now. Tariffs on the first batch kicked in on 1 September, hitting United States goods including soybeans, pork, beef, chemicals and crude oil.

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