The trade war between the United States and China has affected the two biggest economies and a world that is dependent on one or both. Now, we’re seeing early signs of a resolution that has legs to work as China has acknowledged tariffs to and from both sides will start being reduced or even lifted.
“If the two sides achieve a ‘Phase 1’ agreement, then based on the content of that agreement, tariffs already increased should be canceled at the same time and by the same rate,” Commerce Ministry spokesman Gao Feng said at a news briefing.
While no specifics have been released, the statement gives hope to investors and companies reliant on trade with China after concerns over China’s push against tariffs had many fearing talks would be shut down as a result. Gao’s statement indicates legitimate progress. As tariffs go down, both economies plus many around the world will show signs of confidence that an end to the trade war is near.
Governments of the two biggest global economies have raised tariffs on billions of dollars of each other’s goods in the fight over China’s trade surplus and technology ambitions.
That weighs on trade worldwide and threatens to depress global economic growth that already is showing signs of slowing.
The Oct. 12 agreement was modest and details have yet to be put on paper but it was welcomed as a sign of progress toward ending the trade war.
President Donald Trump agreed to postpone a planned tariff hike while lower-level officials hammered out details.
Trump said China agreed to buy up to $50 billion of American farm goods. Beijing has yet to confirm the scale of its commitment.
The biggest obstacle to negotiations seems to be the details surrounding individual components of the trade war. This is why the “phase 1” agreement is more of a commitment to move forward than a signal the trade war is over. It’s a peace offering, and as long as both sides agree to honor it, real trade peace may be just around the corner.
There is still a long way to go to find a complete resolution for the trade war. But as Beijing embraces easing economic tensions between the nations, we may be closer to free trade with China than ever before.
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