The United States and China agreed on Friday to the first phase of a trade deal covering agricultural purchases, currency and some aspects of intellectual property protections, and averting a threatened tariff hike, but President Donald Trump said more needed to be negotiated.
The preliminary, partial deal was the biggest step toward resolving a 15-month tariff war between the world’s two largest economies that has roiled financial markets, disrupted manufacturing and has slowed global growth.
Trump told reporters at the White House that the two sides are very close to ending the trade war and it will take up to five weeks to get the deal written. He spoke after talks with Chinese Vice Premier Liu He.
U.S. Treasury Secretary Steven Mnuchin told reporters Trump had agreed not to proceed with a hike in tariffs to 30% from 25% on about $250 billion in Chinese goods that was supposed to have gone into effect on Tuesday.
But Trade Representative Robert Lighthizer said Trump had not made a decision about tariffs that were subject to go into effect in December.
Major U.S. stock indexes, which were trading sharply higher on hopes of some sort of a deal, pared some of the gains after the announcement, with the S&P 500 index .SPX up about 1.4%.
The dollar dropped to a three-month low on Friday, as safe-haven buying eased and risk sentiment improved on optimism about U.S.-China trade negotiations as well as increased chances for an orderly British exit from the European Union.
The dollar, however, cut losses against the euro and pared gains versus the yen after President Donald Trump announced a partial agreement on trade with China, specifically on intellectual property, financial services, and huge agricultural purchases.
Edward Moya, senior market analyst at OANDA in New York, said the dollar’s moves after Trump’s announcement were in line with the typical “buy the rumour, sell the news” reaction.