US-China trade truce fleeting as tensions linger
The US and China declared a truce in their trade dispute over the weekend, but that will prove temporary if the world’s two largest economies fail to deliver on their vague commitments to re-balance trade.
“We’re putting the trade war on hold,” Treasury Secretary Steven Mnuchin said Sunday after the two sides released a joint statement a day earlier. “Right now, we have agreed to put the tariffs on hold while we execute the framework.”
For now, Mnuchin’s ceasefire declaration will soothe the nerves of investors worried that the world’s two biggest economies were on the verge of an all-out trade conflict. President Donald Trump had threatened to slap tariffs on up to $150 billion in Chinese imports, and Beijing vowed to respond in kind.
Trump on Monday tried to put a positive spin on the negotiations. “China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products - would be one of the best things to happen to our farmers in many years!” he said in a series of postings on Twitter. “On China, Barriers and Tariffs to come down for first time.”
Trump also suggested that the North Korea embargo is showing cracks before the nuclear summit with the US scheduled for June 12. “China must continue to be strong & tight on the Border of North Korea until a deal is made,” Trump tweeted. “The word is that recently the Border has become much more porous and more has been filtering in. I want this to happen, and North Korea to be VERY successful, but only after signing!”
Trump’s statements came after Mnuchin called a truce in the trade war on Saturday following two days of talks between Chinese Vice Premier Liu He and senior American officials, including Trump. But it isn’t seen as a panacea to the months-long conflict.
The truce is “little more than a brief de-escalation of tensions,” said Eswar Prasad, a trade policy professor at Cornell University and former head of the IMF’s China unit. “The fundamental differences on trade and other economic issues remain unresolved.”