After two days of hectic parley, the U.S. and China have reached a consensus on a trade agreement and will now get the approval of their top leaders to implement the ‘framework’. Talking to reporters after nearly 20 hours of negotiations, US Commerce Secretary Howard Lutnick said, “We have reached a framework to implement the Geneva consensus and the call between the two presidents.” Lutnick was referring to the previous agreement that saw a 90-day suspension of steep tariffs on both sides.
Among the issues to be resolved in the “framework” include lifting Chinese restrictions on rare-earth exports to the U.S.. In turn, Washington will roll back the restrictions on sales of advanced tech like that of semiconductors to Beijing. Lutnick and U.S. Trade Representative Jamieson Greer will head back to Washington, D.C., to “make sure President Trump approves” the deal outline.
Markets react to trade talks
Stocks have rallied so far in June as investors remain hopeful about ongoing global trade discussions and overall strength in the market. However, some investors are concerned that the current tariffs could drive inflation higher in the near future, potentially weighing on equities.
Markets in the Asia-Pacific region climbed on Wednesday, on the back of the positive news from the negotiations. According to CNBC.com Mainland China’s CSI 300 index advanced 0.77% higher, while Hong Kong’s Hang Seng Index rose 0.9%. Japan’s benchmark Nikkei 225 added 0.45% while the broader Topix index was flat. As for the U.S. stock futures were near the flatline in early Asian hours. While in overnight trade, the three key benchmarks rose to close in the positive.
U.S.-Mexico discuss steel tariffs
Meanwhile, according to a Bloomberg News report, the United States and Mexico are also starting to negotiate a deal to reduce or eliminate President Donald Trump’s 50% steel tariffs on imports up to a certain volume. It was unclear whether the deal would eliminate tariffs altogether for in-quota steel import volumes from Mexico or reduce them to a lower level; however, the specific volume level of the quota also was not yet determined.