The trade minister, Simon Birmingham, says the Morrison government will be watching “very, very closely” to ensure a weekend detente between America and China does not squeeze Australian agricultural exports.

Donald Trump and Xi Jinping at the G20 reached something of a ceasefire in their escalating trade war, with the American president saying the US would not impose further tariffs in a conflict that threatens global growth.

Trump lifted a ban on American companies selling parts to Chinese telco Huawei in Osaka. In pointing to the ceasefire, Trump told reporters China had agreed to buy “a tremendous amount of food and agricultural products from American farmers”.

“We are going to give them lists of things we want them to buy,” the American president said.

Birmingham, who was part of the Australian delegation at the G20 at the weekend, was asked by the ABC on Sunday whether he knew what Trump meant by that observation, and what the impact would be for Australian farmers, given Australia has a bilateral free trade deal with Beijing.

The trade minister said Australia was “watching very closely”. He said any peace deal between Washington and Beijing needed to be World Trade Organisation compliant, allowing Australian farmers to compete with other exporters on fair terms.

“We don’t want to see a managed outcome that sees particular contracts struck in a way negotiated between governments that cut away opportunities for farmers or businesses from other countries, such as ours, to be able to compete fairly,” Birmingham said on Sunday. “We’ll be watching very closely in that space.”

Birmingham said “on the whole”, taking a “long-term perspective”, it was welcome news that Trump and Xi appeared to be stepping back from trade hostilities “but we’ll keep an eye on the detail and be monitoring that very, very closely”.

The trade dispute was the dominant issue at the Osaka forum. Trump had threatened to extend existing tariffs to cover almost all imports from China to the US unless Beijing made progress in meeting US demands for economic reforms.

The standoff has significant economic implications. The International Monetary Fund earlier this month predicted the tit-for-tat tariffs would cost $455bn in lost output next year.

The Australian prime minister, Scott Morrison, had dampened expectations of a quick fix on Friday evening, saying it was “unrealistic” to think the argument could be patched up in a weekend.

After the events of Saturday he welcomed the progress as better than expected. But Morrison argues the conflict underscores the need for Australia to diversify its economic and diplomatic relationships.

“What all this demonstrates is why Australia has to be out and about as much as possible, engaging with as many countries as we can, to secure as many opportunities as we can,” he told reporters at the G20 of Friday. “What we have to do is continue in the advocacy we are making, but not stand still.”