BUENOS AIRES, Argentina -- U.S. President Donald Trump and Chinese President Xi Jinping declared a temporary truce in their trade war on Dec. 1 after Washington agreed to a 90-day extension on the imposition of additional tariffs and Beijing pledged to buy a "substantial amount" of U.S. products to reduce the trade imbalance.
The cease-fire came on the sideline of the Group of 20 summit, where the two leaders discussed ways to de-escalate trade tensions between the world's top two economies. However, the talks also set the stage for difficult negotiations until March to address deep-rooted structural issues that are hindering a lasting agreement, leaving many experts to believe the two countries could soon clash again.
According to the White House, Trump agreed to postpone a planned tariff hike on $200 billion worth of Chinese goods to 25% on Jan. 1. Beijing, meanwhile, pledged to buy an unspecified but "very substantial amount of agricultural, energy, industrial and other products," and to expand purchases of farm products immediately.
Talks on structural reform in five areas -- forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture -- are set to start immediately. If there is no progress after 90 days, the U.S. will implement the planned tariff hike.
The leaders talked for more than two and a half hours over dinner in a meeting which both Trump and Xi said was "highly successful," according to a statement released by White House Press Secretary Sarah Huckabee Sanders. The start of the dinner was moved up one hour to give the leaders more time to discuss a number of other issues, including North Korea's denuclearization.
Xi also said he is "open to approving" the merger of U.S. semiconductor firm Qualcomm and Dutch chip maker NXP, which Beijing has been blocking on antitrust grounds after the U.S. and European officials had approved it.
"This was an amazing and productive meeting with unlimited possibilities for both the U.S. and China," said Trump in the statement.
Speaking to reporters after the summit, Chinese Foreign Minister Wang Yi said China had agreed to import more U.S. goods "according to its domestic market and people's demands," and to "gradually resolve the trade imbalance." However, the Chinese side announced neither the deadline for the negotiations nor details of the structural reforms.
Escalating tensions between Washington and Beijing have rattled global financial markets and economies. Global trade volumes, for instance, started to moderate in the third quarter, even before the impact of the tit-for-tat tariffs could be felt, data from CPB Netherlands Bureau for Economic Policy Analysis showed on Nov. 23.
Asian manufacturers are also feeling the pinch, with some markets contracting sharply in the latest Nikkei Purchasing Managers' Index. Taiwan suffered a notable slide in October, as its manufacturing PMI dropped to 48.7 from September's 50.8 -- the sector's first contraction since May 2016.
At the G-20 summit, leaders voiced their concerns over the situation. International Monetary Fund Managing Director Christine Lagarde called for an immediate cease-fire. "Pressures on emerging markets have been rising and trade tensions have begun to have a negative impact, increasing downside risks," she said in a statement released at the end of the summit.
Few China watchers, however, are expecting a lasting peace.
"Reaching agreement on such complex issues as forced technology transfer, intellectual property protection and cyber theft within a three-month time frame will be incredibly challenging, regardless of how determined both sides are," said Wendy Cutler, former acting deputy of the U.S. Trade Representative.
Furthermore, the deadline for a new agreement, which has been moved back from January 1 to early March, will come at a politically sensitive time for Beijing. "March 1 comes just before the opening of the annual national legislative session in Beijing, and so a renewal of the trade war then would be particularly embarrassing for Xi Jinping," said Scott Kennedy, deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies.
The U.S. imposed additional tariffs on $250 billion worth of Chinese goods over what it deems unfair trade practices in July, and China immediately retaliated. Though the two camps agreed on the temporary truce, tariff sanctions have not been lifted, suggesting that the trade war is still on despite the announced respite.
Aside from the additional tariff hike originally planned for January, Trump has also said that tariffs targeting a further $267 billion of Chinese goods could be imposed, in effect levying duties on all Chinese exports to the U.S.
Moreover, what was not included in the agenda were Beijing's Made in China 2025 high-tech manufacturing initiative and industrial subsidy practices -- areas that Xi is widely regarded to see as off-limits for discussion. These sore points for the U.S. could become the focus of fierce debate, preventing a warming in the increasingly chilly relationship for the foreseeable future.
At the opening of the summit, Xi indicated his willingness to improve bilateral relations. "China and the United States shoulder important responsibilities in promoting world peace and prosperity," he said, adding that "Cooperation is the best option for the two countries."
Nikkei staff writers Mitsuru Obe in Tokyo and Taisei Hoyama in Washington contributed to this story.