Short-term relief in U.S.-China trade talks leaves long-term risks

WASHINGTON >> In the short run, a truce in the trade conflict between the United States and China has lightened tensions, halted the immediate threat of U.S. tariffs on China’s goods and cheered stock markets.

The long-run picture may not be so sunny.

The outcome of last weekend’s talks upset supporters of Donald Trump’s “America First” policies, left key differences untouched and kept alive the risk of a destructive trade war between the world’s two biggest economies.

A vague statement the two countries released said next to nothing about the issue at the heart of the dispute between Washington and Beijing: The hardball tactics China uses to challenge U.S. technological supremacy. Those tactics include outright cyber theft of trade secrets and demands that American companies hand over some of their technology in exchange for access to the Chinese market.

“They failed to drill down on the biggest frictions facing U.S. businesses and on those where we are most able to move the Chinese,” said Mary Lovely, a Syracuse University economist who specializes in trade.

In exchange for the United States agreeing to hold off on tariffs on up to $150 billion in Chinese goods, Beijing did agree to “substantially reduce” America’s huge trade deficit with China. But Beijing made no specific commitment.

Treasury Secretary Steven Mnuchin’s declaration that the American tariffs would be suspended contributed to a sense of relief in global markets that the two countries had stepped back from the brink.