Trump and Xi agree to tariff cease fire, but the war is not over yet

Trump and Xi

Persistent fears of a worsening trade war between the US and China that would have a serious impact on the air freight industry have been put to rest – at least for the moment – after the two country’s leaders reached a fragile truce at the G20 summit.

US President Donald Trump and China’s President Xi Jinping announced a “highly successful” outcome from negotiations. “This was an amazing and productive meeting with unlimited possibilities for both the United States and China,” said Trump.

In more realistic terms the meeting produced a truce based on two elements. The first is basically fiddling with trade between the two countries with China upping its purchasing of American farm produce, energy and some industrial goods in exchange for an American delay in escalation of tariffs.

These were slated to be upped from 10-25 per cent on USD 200 billion worth of goods on 1 January. This is on hold until 1 April before which formal talks between the two countries are to take place– the second element of the agreement.

In theory negotiators now have until 1 April to agree “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.”

But as analysts have pointed out, there is little economic sense in the latest agreement, not least because bilateral trade deficits don’t mean much, especially in an age when supply chains are global.

And also, bilateral trade deficits are not only a function of Chinese imports, but also of Chinese exports to the US. Even if the Chinese state agrees to boosts the purchase of American goods, it cannot guarantee the behaviour of either Chinese, nor American consumers.

On the second element, one of the key problems between the US and China is the difficulty of enforcing agreements. The World Trade Organisation (WTO) has a dispute-settlement process, but it can be viciously slow. In the past the Chinese officials have promised to do things bilaterally, but then dragged their feet. And it’s exceedingly difficult to prove the Chinese state is responsible, say analysts.

While the current truce is good news, analysts warn the cease fire is exactly that – the war is, by no means, over yet.

Summary
Trump and Xi agree to tariff cease fire, but the war is not over yet
Article Name
Trump and Xi agree to tariff cease fire, but the war is not over yet
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Persistent fears of a worsening trade war between the US and China that would have a serious impact on the air freight industry have been put to rest – at least for the moment – after the two country's leaders reached a fragile truce at the G20 summit.
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AsiaCargoBuzz.com
AsiaCargoBuzz.com
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