It might be fair to say that the worst did not happen. This weekend, both leaders of the United States and China agreed to put a “temporary truce” in the ever-escalating bilateral trade conflicts. In a nut shell, the current level (10%) of the U.S. retaliatory tariffs against Chinese imports will not increase to a higher (25%) level next year; China will soon import a “very substantial” amount of the U.S. products, such as energy and agricultural products. In particular, China will resume importing the U.S. agricultural products “immediately,” which is an apparent move to ease the political pressure that has recently built up in major agricultural states in the United States. Both parties will immediately begin negotiations over those contentious issues, including the alleged forced technology transfer and cyber intrusions. If no “transaction” is completed within the next 90 days, the U.S. government will execute its tariff increase (up to 25%).
While both leaders responded mainly to “domestic audiences” that have been hit hard by trade wars, this is “not a suspension of the trade war but a suspension of the escalation of the trade war.” Could all those difficult, and structural, issues be resolved within the next three months? After all, tensions deeper and more fundamental than just trade seem to run beneath the surface of tariff wars. Interestingly, here is one reaction from the Chinese media, which seems to be directed to both domestic and foreign audiences.
“The Chinese public needs to keep in mind that China-US trade negotiations fluctuate. China's reform and opening-up's broad perspective recognizes that the rest of the world does things differently. As that picture is getting bigger, we can accept those differences while acknowledging them peacefully, and be more active and open-minded in solving problems through interaction.”
So, back to Sir Winston Churchill, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
