The announcement of new U.S.-China trade talks next month sent stocks higher Thursday, though the two sides remain far apart and still plan to hit each other with punishing new tariffs.
The Dow Jones industrial average jumped nearly 400 points, or 1.4 percent, to close at 26,728. The broader Standard & Poor’s 500-stock index rose 1.3 percent, while the technology-heavy Nasdaq jumped 1.8 percent.
Businesses that have suffered from President Trump’s imposition of tariffs on more than $550 billion worth of Chinese goods welcomed word that the two sides are heading back to the bargaining table.
“We urge the administration to end this trade war and come to an agreement that results in a complete rollback of the existing tariffs,” said Matthew Shay, chief executive of the National Retail Federation. “This trade war has gone on far too long, and the harmful consequences for American business and consumers continues to grow.”
China’s top trade negotiator, Vice Premier Liu He, agreed to the October visit in a phone call with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert E. Lighthizer, China’s Commerce Ministry said. “Serious” mid-level discussions will begin in mid-September to prepare for next month’s visit, the ministry added.
The announcement marks the first sign of a diplomatic thaw since the two governments traded tariff blows last month and engaged in a rhetorical exchange that underscored the adversarial mood settling over the two capitals. At one point, Trump ordered American companies to prepare to leave China.
After China last month announced retaliatory tariffs on $75 billion worth of American goods, Trump increased to 15 percent a previously announced 10 percent tariff on $300 billion in Chinese imports.
The first installment, affecting $112 billion in Chinese merchandise, took effect Sunday. The second blow is scheduled to land Dec. 15. Meanwhile, on Oct. 1, an earlier round of tariffs increases to 30 percent from 25 percent on an additional $250 billion in imports.
Trump has used tariffs more aggressively than any president since the Great Depression, damaging both the U.S. and Chinese economies.
Uncertainty over trade policy is shaving about 1 percent off the global economy, hitting the United States, other advanced economies and emerging markets with roughly equal force, according to a new Federal Reserve study of corporate earnings calls and press reports.
Employers in the United States cited trade worries in cutting 10,488 jobs last month, Challenger, Gray & Christmas, a global outplacement firm, said Thursday.
Adam Greenberg, owner of NorthShore Care Supply, is among those struggling to adjust. The Buffalo Grove, Ill.,-based company makes specialized adult diapers for individuals who suffer from a complete lack of bladder control due to ailments such as nerve damage, hysterectomy, kidney failure and Alzheimer’s disease.
The company has been able to find manufacturers equipped to make the specialized MegaMax briefs only in China, Greenberg said. And his Chinese suppliers so far have refused to share the tariff pain.
“We have hundreds of thousands of dollars worth of this product, many containers, on the water or on the way,” he said. “We have to raise the price or cut our costs, which may involve layoffs.”
Likewise, China’s State Council on Wednesday acknowledged that its economy is coming under more pressure because of an “increasingly complicated and challenging external environment,” according to the state-run Xinhua news agency.
Several research firms including Bank of America Merrill Lynch this week cut their forecasts for China’s economic growth rate this year to below 6 percent.
Although both governments are interested in a deal, they remain at odds over several key issues, including U.S. demands for structural changes in China’s state-led economic system.
“I don’t see any real sign that they’re coming back to the table because positions have changed,” said Rufus Yerxa, president of the National Foreign Trade Council. “They don’t want to look like they’re not willing to engage. Both sides are hunkering down for a longer fight.”
The October talks — the 13th round of dialogue — were originally scheduled for this month. Chinese officials in recent weeks have suggested that lower-level discussions with Washington were continuing even while Trump has fumed on Twitter about China’s behavior and threatened “much tougher” actions.
In China, policy analysts, state media and some officials have quoted founding leader Mao Zedong’s tactic of “fight fight, talk talk” to describe Beijing’s willingness to simultaneously battle and parley for peace with Washington.
Chinese President Xi Jinping has played down the possibility of a swift and comprehensive resolution to the trade conflict. In recent speeches, he has rallied the ruling Communist Party for a protracted “struggle” with foreign adversaries.
Along with the U.S. tensions and mounting economic hardship exacerbated by the trade war, Xi also described the anti-government unrest in Hong Kong as a major political risk. China also has accused Washington of fomenting the protests in Hong Kong to undermine the Communist regime .
China said this week it filed a case filed with the World Trade Organization against the United States because the Trump administration’s tariff strategy has harmed global growth, induced uncertainty and posed a long-term threat to the rules-based multilateral global trading system.
Taylor Telford in Washington contributed to this report.