As US stocks swing between slight gains and losses, investors are waiting with baited breath for President Trump and Chinese Vice Premier Liu He to sign the ‘Phase 1’ trade deal, the first sign of comity in what has been an acrimonious two-year trade battle between the world’s two largest economies.
Earlier, we delved into the details of the agreement, the text of which is expected to be released on Wednesday. The basic takeaway is this: While it should narrow the US trade deficit with China, the agreement does nothing to curb China’s illegal state subsidies and rampant cyber theft, some of the biggest concerns of China hawks.
The US will scale back some tariffs, but the trade war tariffs will remain in place until after the election, a mechanism to help ensure Chinese compliance with the trade deal.
While markets remain largely optimistic, China’s Global Times posted an editorial earlier complaining about the deal, and claiming that the negotiations for ‘Phase 2’ might not start for a while.
But in the short term, the deal should boost US exports to China by $200 billion over two years, which will help reverse the trade war-inspired drop.
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But as the two sides gear up for the next round of negotiations, will the trade detente last? That, of course, remains to be seen.