A highly anticipated G-20 Summit resulted in a temporary slowdown in the escalating trade war between the U.S. and China, but also a threat by the U.S. to withdraw from the North American Free Trade Agreement, potentially stifling free trade with Canada and Mexico.

China

President Donald Trump told reporters following a closely watched meeting Dec. 1 with Chinese President Xi Jinping that the two leaders agreed to a 90-day negotiation period during which China would address outstanding technology and trade issues the White House said have harmed American businesses.

Most notably, Trump agreed to temporarily delay the scheduled rise of tariffs on $200 billion of Chinese imports to 25% on Jan. 1, 2019.

That batch of tariffs, enacted at a 10% rate in September, target a number of consumer products, including bicycles, juice products and some consumer electronics.

The deal, reached under dinner with Xi on the sidelines of the G-20 Summit in Buenos Aires, holds China to addressing existing issues with intellectual property theft and forced cyber theft, the basis of the Section 301 investigation launched by Washington in August 2017 that resulted in the initial tariffs and sparking the ensuing retaliatory tariffs on Beijing.

Should China not sufficiently address the issues within 90 days, the 10% rate will rise to 25% as scheduled, the White House said.

"This was an amazing and productive meeting with unlimited possibilities for both the United States and China," Trump said in a statement.

Press Secretary Sarah Huckabee Sanders said in a statement that China agreed to purchase a "not yet agreed upon, but very substantial" amount of agriculture, energy, industrial and other product from the U.S.

"China has agreed to start purchasing agricultural product from our farmers immediately," Sanders said.

The news was well-received by the Retail Industry Leaders Association, or RILA, one of many consumer groups that has lobbied the administration to back off the tariffs that it says will disrupt existing supply chains and raise production and consumer prices.

"Achieving a resolution that forgoes a 25% increase and any additional tariffs placed on everyday consumer items will benefit millions of American families across the country," Hun Quach, RILA's vice president for international trade, said in a statement late Dec. 1.

Xi also agreed to designate fentanyl as a controlled substance, which would subject anyone from China attempting to sell the synthetic opioid that is roughly 100x stronger than morphine to the U.S. to China's maximum penalty under the law.

NAFTA

Perhaps a more surprising outcome of the G-20 was Trump's threat to withdraw the U.S. from the North American Free Trade Agreement, or NAFTA, the existing trade agreement between the U.S., Mexico and Canada, putting maximum pressure on Congress to approve its recently signed replacement.

"I will be formally terminating NAFTA shortly," Trump told reporters aboard Air Force One, according to pool reports. "Congress will have a choice of approving the USMCA, which is a phenomenal deal. So we'll be terminating NAFTA in the not-too-distant future."

Trump did not specify exactly when a termination may come.

Trump, Canadian Prime Minister Justin Trudeau and former Mexican President Enrique Pena Nieto, on his last day in office Nov. 30, signed the United States-Mexico-Canada Agreement, or USMCA, which would replace the existing NAFTA.

Now that the USMCA has been signed by the three leaders, it is up to each country's respective legislatures to pass the deal before it can enter into force.

But concern has grown among the Trump administration that a Democrat-controlled House could hold up the deal in exchange for demands being met on other outstanding policy issues such as immigration and healthcare.

A formal termination of the existing NAFTA would trigger a six-month withdrawal process under U.S. trade law, which could very well temporarily stifle free trade in North America.

Trump also said the 25% tariff and 10% tariff on imports of Canadian steel and aluminum, respectively, would stay on despite Ottawa's strong objection to not receiving an exemption to the measures.