WASHINGTON - The Trump administration is suspending a tariff hike on $250 billion in Chinese imports that was set to take effect Tuesday, and China agreed to buy $40 billion to $50 billion in U.S. farm products as the world's two biggest economies reached a cease-fire in their 15-month trade war.
The White House said the two sides made some progress on the thornier issues, including China's lax protection of foreign intellectual property. But more work will have to be made on key differences in later negotiations, including U.S. allegations that China forces foreign countries to hand over trade secrets in return for access to the Chinese market.
The U.S. and Chinese negotiators have so far reached their tentative agreement only in principle. No documents have been signed.
President Donald Trump announced the trade truce in a White House meeting with the top Chinese negotiator, Vice Premier Liu He. The news followed two days of talks in Washington.
"You're very tough negotiators," Trump said to the Chinese delegation.
Trump has yet to drop plans to impose tariffs Dec. 15 on an additional $160 billion in Chinese products, a move that would extend the sanctions to just about everything China ships to the United States. The December tariffs would cover a wide range of consumer goods, including clothes, toys and smartphones and would likely be felt by American shoppers.
The trade war has taken an economic toll on both countries. U.S. manufacturers are hurt by rising costs from the tariffs and by uncertainty over when and how the trade hostilities will win.
"They're trying to de-escalate," said Timothy Keeler, a lawyer at the law firm Mayer Brown and former chief of staff at the Office of the U.S. Trade Representatives. "I think it serves both sides' interests because both sides were feeling pain."
Stock prices had been up substantially all day, partially in anticipation of a significant trade agreement. But once the White House announced the contours of the tentative accord, the market shed some of its gains. The Dow Jones industrial average, which had risen more than 500 points at its high, closed up 319.
The negotiators did not deal with a dispute over the Chinese telecommunications giant Huawei. The U.S. has imposed sanctions on Huawei, saying it poses a threat to U.S. national security because its equipment can be used for espionage. Trump has said he was willing to use Huawei as a bargaining chip in the trade talks.
Among the skeptics of Friday's agreement is Derek Scissors, a China expert at the American Enterprise Institute, who suggested that the deal amounted to merely a temporary pause in the conflict.
"The president is acting as if a lot of Chinese concessions have been nailed down, and they just haven't," Scissors said.
Gregory Daco, an economist at Oxford Economics, said the partial nature of the deal won't relieve much of the uncertainty surrounding trade policy that has discouraged many American companies from investing in new equipment and expanding.
"For businesses this will mean less damage, not greater certainty," Daco said in a research note.
Daco has estimated that the trade fight will cut U.S. growth by about 0.6 percentage point in 2020. Friday's pact might reduce that slightly to 0.5 percentage point, he said.
The two countries are deadlocked primarily over the Trump administration's assertions that China deploys predatory tactics - including outright theft - in a sharp-elbowed drive to become the global leader in robotics, self-driving cars and other advanced technology.
Beijing has been reluctant to make the kind of substantive policy reforms that would satisfy the administration. Doing so would likely require scaling back China's aspirations for technological supremacy, which it sees as crucial to its prosperity.
For now, the two sides have come to "almost a complete agreement" on both financial services and currency issues, Treasury Secretary Steven Mnuchin said.
The Chinese agreed to be more transparent about the way they set the value of their currency, the yuan. The Trump administration has accused China of manipulating the yuan lower to give its exporter a price advantage in foreign markets.
China has agreed to open its markets to U.S. banks and other financial services providers, Mnuchin said.
Earlier Friday, China announced a timetable for carrying out a promise to allow full foreign ownership of some finance businesses, starting with futures traders on Jan. 1, as Beijing tries to make its slowing economy more competitive and efficient.
Ownership limits will be ended for mutual fund companies on April 1 and for securities firm on Dec. 1, the China Securities Regulatory Commission said. Until now, foreign investors have been limited to owning 51% of such businesses.