White House – December 1, 2018

Dear Valued Customer:

The President of the United States, Donald J. Trump, and President Xi Jinping of China, met for dinner on Saturday December 1, 2018 at the G-20 summit in Argentina, in what the White House described as a “highly successful meeting”.

The two leaders agreed to hold off for 90 days on additional tariffs on each other’s goods at the start of the new year to allow for talks to continue. The U.S. agreed to leave tariffs on the third tranche of more than $200 billion worth of Chinese products at 10 percent and not raise it to 25% at this time.

“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately,” the White House said.

Negotiations between the two nations will begin immediately on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.

Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If after 90 days the two countries are unable to reach an agreement, that rate will be raised to 25 percent, according to the White House.

Treasury Secretary Steven Mnuchin told CNBC’s “Squawk Box” on Monday he is hopeful the two nations can turn discussions between Trump and Xi into a concrete trade agreement.

This is all constructive news, however the overarching concerns in the US-China relationship remain. Some of the bigger, structural issues are not ones that can be easily tackled in a 90-day period. It is unclear whether the 90-day period began on December 1 or whether it is postponed 90 days from the original January 1, 2019 date that the increase to 25 percent was set to begin. If it began on December 1, the expiration of the 90-day period would fall on Friday, March 1, 2019.

Thank you for your attention and cooperation. If you have any questions, please contact your nearest JJB representative.

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