Real Deal or No Deal
Confusion around the feasibility of a US-China Trade Deal

At the G-20 summit in Argentina, United States President Donald Trump had the opportunity to meet and discuss pertinent policy and economic issues with other global leaders. He did meet with a few world leaders, but it was his cluelessness at the summit that managed to garner significant media attention. Nonetheless, he met with Chinese President Xi Jinping over a steak dinner – during which they held bilateral talks regarding the ongoing trade war between the two nations. Both presidents called the meeting “highly successful”, agreeing to a temporary truce in the trade war. Now, both countries have agreed to work closely to establish a renewed trade deal that’s set to benefit both parties – all within the next 90 days.

Often criticized for its slow approach to negotiations and not following through on commitments, the Chinese Commerce Ministry was quick to release a statement that expressed confidence that such a deal can be reached in time. The ministry said that China would try to work quickly to implement specific issues that were agreed upon at the meeting, along with working closely with American counterparts to implement a new deal within the allocated time. A statement issued by the White House also states that China has agreed to purchase a “very substantial” amount of American products, including “agricultural product from our farmers.” After China stopped importing crude oil from the U.S, Chinese oil trader Unipec now plans to resume buying U.S. crude by March after both parties reduced the risk of tariffs on oil imports.

Trump meanwhile has warned that if China fails to reach a negotiation within the intended period, tariffs will be back on the table and would be much larger than before. “We are either going to have a REAL DEAL with China, or no deal at all – at which point we will be charging major Tariffs against Chinese product being shipped into the United States. Ultimately, I believe, we will be making a deal – either now or into the future,” Trump tweeted within minutes of the Commerce Ministry statement.

However, confusion surrounding the substance of the trade cease-fire contributed to a broad stock market plunge and intensified fears of a global economic slowdown. White House aides struggled to explain the details of what the two countries actually agreed on, while China has not confirmed that made most of the concessions that the trump administration has claimed. As investors were left in doubt over what could realistically be accomplished, global financial markets took a tumble. The benchmark Shanghai stock index SSEC slipped 0.2% and Dow Jones shed about 800 points, or 3.1%. “Despite a temporary de-escalation of hostilities following the G-20 summit, the relationship between the U.S. and China will remain contentious,” Moody’s Investors Service stated. They also said, “Narrow agreements and modest concessions in the ongoing trade dispute will not bridge the wide gulf in their respective economic, political and strategic interests.”

Meanwhile, Trump didn’t wait a minute of his time before adding the outcome of the meeting to his list of accomplishments. Tariffs on $200 billion of Chinese products were set to jump from 10% to 25% after 1st Jan, 2019 – which is now halted. Now, both parties have to chalk out a deal within 90 days to ensure the high tariffs are not re-instated again.