(Bloomberg) -- The U.S. and China said their presidents will meet in Japan next week to relaunch trade talks after a monthlong stalemate, triggering a rally in financial markets.
President Donald Trump said Tuesday that he had a “very good” phone conversation with Chinese counterpart Xi Jinping. The two leaders will hold an “extended meeting” at the G-20 summit on June 28-29 in Osaka and “our respective teams will begin talks prior to our meeting,” Trump said on Twitter. The U.S. president had repeatedly threatened more tariffs if Xi spurned the opportunity to talk.
“The meeting might very well go well,” Trump told reporters as he departed the White House to officially launch his re-election campaign in Orlando. China wants to make a deal, he added.
“That is working out pretty much as I anticipated,” he said.
Xi said he’s willing to meet with Trump and exchange views, the state-run China Central Television reported. The two nations’ economic and trade teams should keep in contact on how to solve differences, according to the statement. The dispute covers areas ranging from tariffs to Chinese intellectual-property protections.
U.S. stocks extended gains on the news, while Treasuries retreated. The S&P 500 rose about 1% in New York.
Talks with Beijing broke off last month after the U.S. accused China’s leaders of reneging on provisions of a tentative trade agreement and Beijing said the U.S. raised its demands. Trump raised tariffs on about $200 billion of Chinese imports to 25%, and said he would expand the tariffs to cover another $325 billion in goods -- essentially everything the country exports to the U.S. -- unless Chinese leaders reversed course.
U.S. Trade Representative Robert Lighthizer told senators at a hearing in Washington on Tuesday that the Trump administration will stay tough.
“Our economic relationship with China has been unbalanced and grossly unfair to American farmers, ranchers and businesses for decades,” Lighthizer said in testimony to the Senate Finance Committee. On top of existing tariffs, the administration is prepared to do more “if certain issues cannot be resolved satisfactorily,” he added.
But while expectations have been raised for a breakthrough during the leaders’ face-to-face meeting, Commerce Secretary Wilbur Ross over the weekend downplayed the prospect of a major deal in the near term.
“I think the most that will come out of the G-20 might be an agreement to actively resume talks,” possibly with new ground rules and a schedule, Ross said in an interview Sunday with the Wall Street Journal.
Paying Tariffs
Trump has said that China must return to concessions it made in earlier rounds of talks. The U.S. president has repeated his claim that Chinese exporters pay the tariffs, disputing the consensus of economists that the costs are largely borne by U.S. importers and consumers.
“They subsidize their industry, so our people are not paying,” Trump said Friday in an interview with Fox News. “There’s this big thing about tariffs, ‘Oh, our people pay.’ It’s a lot of nonsense. You know what happens, really? Companies move back.”
Trump’s announcement of the call came shortly after a tweet in which he again accused China and other countries of manipulating their currencies, “making it unfairly easier for them to compete with the USA.”
China made moves to strengthen its currency earlier this month. During Trump’s presidency the U.S. Treasury Department has repeatedly refrained from officially accusing China of manipulating the yuan.
(Updates with Trump remarks beginning in paragraph three.)
