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Trump says ‘big progress’ on possible China trade deal

Trump says ‘big progress’ on possible China trade deal

WASHINGTON, Dec 30: US President Donald Trump said on Twitter that he had a “long and very good call” with Chinese President Xi Jinping and that a possible trade deal between the United States and China was progressing well, reports Reuters. As a partial shutdown of the U.S. government entered its eighth day, with no quick end in sight, the Republican president was in Washington, sending out tweets attacking Democrats and talking up possibly improved relations with China. The two nations have been in a trade war for much of 2018, shaking world financial markets as the flow of hundreds of billions of dollars worth of goods between the world’s two largest economies has been disrupted by tariffs. Trump and Xi agreed to a ceasefire in the trade war, deciding to hold off on imposing more tariffs for 90 days starting Dec. 1 while they negotiate a deal to end the dispute following months of escalating tensions. “Just had a long and very good call with President Xi of China,” Trump wrote on Saturday. “Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!” Chinese state media also said Xi and Trump spoke on Saturday, and quoted Xi as saying that teams from both countries have been working to implement a consensus reached with Trump. “I hope that the two teams will meet each other half way, work hard, and strive to reach an agreement that is mutually beneficial and beneficial to the world as soon as possible,” Xi said, according to the state- run Xinhua news agency. China’s foreign ministry said on Sunday the two countries’ relationship had endured storms before, but that strong ties were important for the economies of both nations and for ensuring global stability and peace. Ministry spokesman Lu Kang said that Sino-U.S. ties now “stand at a historic new starting point” and that the two sides should respect each other’s sovereignty, security and development interest and appropriately manage differences. “Both sides should stick to rationally and objectively viewing the other side’s strategic intentions, strengthen strategic communication and promote strategic mutual trust to prevent strategic misjudgments,” he said in a statement. Having canceled his plans to travel to his estate in Florida for the holidays because of the government shutdown that started on Dec. 22, Trump tweeted, “I am in the White House waiting for the Democrats to come on over and make a deal.” The Republican-controlled Congress was closed for the weekend and few lawmakers were in the capital. The shutdown, affecting about one-quarter of the federal government including 800,000 or so workers, began when funding for several agencies expired. Congress must pass legislation to restore that funding, but has not done so due to a dispute over Trump’s demand that the bill include $5 billion in taxpayer money to help pay for a wall he wants to build along the U.S.-Mexico border. The wall was a major 2016 campaign promise of Trump’s, who promised then that it would be paid for by Mexico, which has steadfastly refused to do so. Trump has since demanded that U.S. taxpayers pay for it at an estimated total cost of $23 billion. He sees the wall as vital to stemming illegal immigration, while Democrats and some Republicans see it as an impractical and costly project. The standoff over Trump’s demand for funding will be a test for Congress when it returns next week. Trump tweeted on Saturday that the deaths of two migrant children this month who had been taken into U.S. custody after trying to cross the southern border were “strictly the fault of the Democrats and their pathetic immigration policies.” It was unclear exactly which policies Trump was referring to, but his aides have referred to U.S. laws and court rulings - including laws passed with bipartisan support - that govern the conditions under which children and families can be detained as “loopholes” that encourage illegal immigration. On Friday, Secretary of Homeland Security Kirstjen Nielsen visited Border Patrol stations in Texas after her agency instituted expanded medical checks of migrant children following the two deaths. She is also due to visit Yuma, Arizona, the Department of Homeland Security said in a statement on Saturday. In the interim, thousands of employees of federal agencies such as the Homeland Security, Justice, Commerce, Interior, Transportation, Agriculture and other departments were staying at home on furlough or soon to be working without pay. For instance, members of the U.S. Coast Guard will receive their final paychecks of the year on Monday, the service said in a statement on its website on Friday after previously warning that payments would be delayed due to the shutdown. “The administration, the Department of Homeland Security [DHS], and the Coast Guard have identified a way to pay our military workforce on Dec. 31, 2018,” the service website read. That paycheck will be their last until the government reopens. The Federal Emergency Management Agency also said on Friday that it would resume issuing new flood insurance policies during the shutdown, reversing an earlier decision. Earlier report said, the US-China trade war resulted in billions of dollars of losses for both sides in 2018, hitting industries including autos, technology - and above all, agriculture, reports Reuters. Broad pain from trade tariffs outlined by several economists shows that, while specialized industries including U.S. soybean crushing benefited from the dispute, it had an overall detrimental impact on both of the world’s two largest economies. The losses may give U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, motivation to resolve their trade differences before a March 2 deadline, although talks between the economic superpowers could still devolve. The U.S. and Chinese economies each lose about $2.9 billion annually due to Beijing’s tariffs on soybeans, corn, wheat and sorghum alone, said Purdue University agricultural economist Wally Tyner. Disrupted agricultural trade hurt both sides particularly hard because China is the world’s biggest soybean importer and last year relied on the United States for $12 billion worth of the oilseed. China has mostly been buying soy from Brazil since imposing a 25 percent tariff on American soybeans in July in retaliation for U.S. tariffs on Chinese goods. The surge in demand pushed Brazilian soy premiums to a record over U.S. soy futures in Chicago, in an example of the trade war reducing sales for U.S. exporters and raising costs for Chinese importers. “It’s something that’s crying for a resolution,” Tyner said. “It’s a lose-lose for both the United States and China.” Total U.S. agricultural export shipments to China for the first 10 months of 2018 fell by 42 percent from a year earlier to about $8.3 billion, according to the U.S. Department of Agriculture. The most actively traded soybean futures contract averaged $8.75 per bushel from July to December 2018, down from an average of $9.76 during the same period a year earlier. As of Dec. 28, futures in the last month of the year were averaging $8.95-1/2 a bushel. That was down from $9.61-3/4 for all of December last year. To compensate suffering farmers, the U.S. government has allocated about $11 billion to direct payments and buying agricultural goods for government food programs, after consulting economists, including Tyner. In North Dakota, which exports crops to China through ports in the Pacific Northwest, soy farmers face at least $280 million in losses because of Beijing’s tariffs, said Mark Watne, president of the North Dakota Farmers Union. “You could almost put another $100 million on top of this because all commodity prices are down and that affects North Dakota farmers indirectly,” Watne said. China’s tariffs improved margins for U.S. soy crushers such as Archer Daniels Midland Co (ADM.N) by leaving plentiful supplies of cheap soybeans on the domestic market. Chinese soybean mills, on the other hand, front- loaded soy purchases ahead of the tariffs. This led to an oversupply that reduced Chinese processing margins and led factories this summer to make the biggest cuts in years to the production of soymeal used to feed livestock. China resumed purchases of U.S. soybeans in early December following a trade truce agreed to by leaders from the two countries during G20 summit in Argentina. But Beijing kept its 25 percent tariffs on the oilseed from America, which effectively curbed commercial Chinese buying. “With the tariffs, the beans can’t go into the commercial system,” said a manager at a major Chinese feed producer, speaking on condition of anonymity. “The buying will have a very limited impact on the market.” China also suffered as products such as phone batteries were hit by U.S. tariffs, and customers began looking to buy from other countries. A study commissioned by the Consumer Technology Association showed U.S. tariffs on imported Chinese products cost the technology industry an additional $1 billion per month. The conflict also squeezed U.S. retail, manufacturing and construction companies that had to pay more for metal and other goods. “Input price pressures remained elevated in part due to tariffs, particularly in manufacturing and construction, and firms were struggling to pass these higher costs onto customers,” the Dallas Federal Reserve said. The Big Three Detroit automakers - General Motors, Ford and Fiat Chrysler Automobiles – have each said higher tariff costs will result in a hit to profits of about $1 billion this year. The pain is ongoing, economists say: Ford and Fiat expect a similar hit in 2019.

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