Meanwhile, White House National Economic Council Director Larry Kudlow said there wasn't an actual agreement for China to remove auto tariffs, but that he expected China to eventually do it as a measure of good faith. -China trade war "ceasefire" this weekend was a very good sign for the near-term future at least, and the markets are responding accordingly.
While tariffs alone shouldn't destroy the economy, they certainly add weight to the burden of other problems: falling oil prices, slowing real estate markets, the flattening of the yield curve thanks to "hawkish" comments from the Federal Reserve, and the sinking stock market. This would suggest the failure of more hawkish advisors, such as Stephen Miller and Peter Navarro, to convince the president to keep Chinese students out of the U.S.
"It looks to me that the ball is being moved in the right direction", Kudlow said.
Following a meeting between Trump and China President Xi Jinping in Argentina, Trump took to Twitter to announce that China has "agreed to reduce and remove tariffs" on cars imported from United States factories.
"Both parties agree that they will endeavor to have this transaction completed within the next 90 days".
While Washington touted the immediate increase in Chinese purchases of United States agricultural products, Beijing's statement was much more open, with no reference to immediate or agricultural products.
But the deal was also vague, and the uncertainty has led to skepticism that the divides between the U.S. and Chinese goals can be bridged.
"I think there'd be quite a burst in shipments of small, less-expensive Korean cars to China, and also of parts, that's another big part of auto trade", he said.
There are several significant take-aways from this development, including the argument that Trump's hard line, even at times belligerent stance with Beijing, has caused them to blink first, particularly since economic growth in China has already started to feel the brunt of USA tariffs, while US economic growth, though not as robust as a few months ago, is still strong. "It's just madness", the former official said, who asked for anonymity to describe confidential discussions.
"We don't yet have a specific agreement on that", Kudlow said on a conference call with reporters. "Nobody is under any illusions".
Trump warned that although he and Xi want to get to an agreement "remember, I am a Tariff Man". Trump has not promised to lift all tariffs against Chinese goods.
"We didn't really give up anything to China. The most important thing is those structural changes that have to be met".
Both sides will immediately hold talks on structural changes concerning forced technology transfers made by Chinese firms on USA companies, intellectual property rights protection, non-tariff trade barriers, cyber intrusion concerns, cyber theft and agricultural, the White House added.
Washington also expects China to promptly address structural issues including intellectual property theft and forced technology transfers, US officials have said.
Chinese officials discussed the possibility of lowering tariffs on US vehicle imports before Xi met Trump in Argentina, according to a person familiar with the situation who asked not to be identified.
The Dow plunged about 800 points as banks led Wall Street lower on Tuesday after a decline in US bond yields set off w.
Confusion has also arisen over when the agreed 90 day period for negotiations will kick in, with some saying it begins now, others claiming it's January.