Investors were lifted by news over the weekend that U.S. President Donald Trump and Chinese President Xi Jinping agreed during talks in Argentina to hold off on new tariffs for 90 days, declaring a truce following months of escalating tensions on trade and other issues.
Trump agreed in July not to impose higher duties on European Union cars while the two sides sought to improve ties in a number of fields, from regulatory cooperation to energy and a deal to remove tariffs on industrial goods.
Global markets rose on Monday to their highest levels in about three weeks on the news.
The Dow Jones Industrial Average slumped almost 800 points Tuesday as investors realized that the agreement between Trump and Xi may not stave off hostilities for long.
Shares of USA and overseas auto companies rose on the announcement, though it's unclear how much companies like GM or Ford will actually benefit. Trump said on Tuesday that Lighthizer would work closely with Mnuchin, Kudlow and trade adviser Peter Navarro.
White House economic advisor Larry Kudlow said the figure was a broad benchmark that would depend on private transactions for USA goods and was subject to market conditions.
Last week, BMW said it was considering building a second manufacturing plant in the United States that could produce engines and transmissions, which drew praise from Trump.
At the core of America's trade complaints is China's unfair trade practices that put American companies operating in China on the backfoot.
"President Xi and I want this deal to happen, and it probably will", Trump tweeted.
The White House says the deal with Xi will see China buy large amounts of U.S. agricultural produce to close the trade deficit and includes an agreement by Beijing to curtail the flow of fentanyl, a powerful opioid, into the US. -China trade talks were on track. "China relations that both sides claim victory", said Michael Pillsbury, a senior fellow at the Hudson Institute and a defense official under presidents including Ronald Reagan and George W. Bush.
He gave no further details.
The White House said Trump and Xi agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.
The Motor & Equipment Manufacturers Association, which opposed the tariffs, said the truce would reduce the risk of an ongoing trade dispute with China.
Kudlow said: "They can not slow walk this, stall this, meander this".
"How can you buy USA products if China does not reduce the tariffs?" None of the commitments were agreed to in writing and many specifics have yet to be worked out.
This means that the U.S. will not raise duties on Chinese goods at $ 200 billion to 25 percent at the beginning of the new year.
Volkswagen AG and Daimler AG executives both said they thought the chances that new tariffs will be imposed had been lessened following the meeting.
The appointment may signify a harder line with Beijing and marks a shift from the past, when Mnuchin had a lead role.
Treasury Secretary Steven Mnuchin told reporters at the White House Monday that there was an "an immediate focus on reducing auto tariffs", though he did not provide details or timing. This would have raised prices in the United States on many consumer items, including smartphones, clothes and toys.