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Sep 20, 2019

US President Donald Trump on Wednesday welcomed an apparent olive branch from Beijing in the grinding trade war between the two nations, which was handed down weeks before negotiations are due to resume.

Beijing announced it was momentarily exempting some US exports from tariff increases, a gesture that lifted equities markets long battered by the roller coaster of a conflict the past two years.

President Trump stated that this was a big move on Beijing’s part. He reiterated that Beijing was under pressure to strike a bargain as its economy weakens, which he attributed to US actions.

Top negotiators expect to reconvene in Washington early next month after an hostile summer in which trade relations deteriorated sharply and both governments announced waves of new tariffs in a stand-off that is dragging on the global economy.

However, the goods exempted do not include high-profile agricultural items like soybeans and pork that could be crucial to the ultimate success of any agreement.

The exemptions will become effective on September 17 and be valid for a year, according to the Customs Tariff Commission of the State Council, which released two lists that include seafood products and anti-cancer drugs.

The lists mark the first time Beijing has announced products to be excluded from tariffs. Concessions such as this one

Other categories that will become spared include alfalfa pellets, fish feed, medical linear accelerators and mold release agents, and the commission said it was also considering further exemptions.

Both sides imposed fresh tit-for-tat tariffs on September 1, adding to the duties that now cover hundreds of billions of dollars of goods.

"These adjustments signal that China is more willing to make progress in the October trade talks, likely toward striking a 'narrow' agreement that involves China buying more US goods in exchange for the US suspending further tariff hikes," Barclays analysts said in a research note.

The mutual interests of this negotiation have played a pivotal part of both sides attempting to work towards a common goal of fairness of trade. Further, as the trade negotiations move, specific walk-away points will need to be reassessed by both parties involved.