The most recent breakthrough in trade talks between the US and China came as a surprise after months of fruitless attempts to shift the tide and stop the ever increasing bilateral tariffs. However, Dr Ei Sun Oh, a senior fellow at the Singapore Institute of International Affairs, believes this development must be taken with cautious optimism and warned against grand market expectations, which are currently "a little bit overblown".
The pundit noted that in the past, tentative agreements have often been reached only to be unravelled at the very last moment. He indicated that the failed May negotiations between Washington and Beijing are one of the latest examples. Ei Sun Oh further opined that a comprehensive trade deal is unlikely to see be reached under the current administration.
"I frankly think the trade dispute is unlikely to see its more comprehensive settlement during Trump's term, including if he is re-elected. This is because his brand of protectionism would like to see the US restored to its previous manufacturing glory, which is near impossible due to the higher costs of doing business in the US as well as more stringent labour and environmental protections", he said.
US President Donald Trump announced on 11 October that Washington and Beijing had reached a "very substantial phase one deal" on bilateral trade, with Treasury Secretary Steven Mnuchin adding that it addressed US concerns related to foreign exchange rates.
Mnuchin refused to say whether the US designation of China as a currency manipulator will be rescinded, but admitted that there is such a possibility. The treasury secretary also confirmed that a new planned tariff rise would not be take place as planned in light of the progress in trade talks.
The deal I just made with China is, by far, the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country. In fact, there is a question as to whether or not this much product can be produced? Our farmers will figure it out. Thank you China!
— Donald J. Trump (@realDonaldTrump) October 12, 2019
Trump called the agreement great for US farmers, whose agricultural products will receive certain concessions from China in return for "some tariff relief". He further added that other economic aspects have been discussed as part of a new agreement, including technology and financial services.
The two countries have been embroiled in a trade war ever since the US started by imposing tariffs on Chinese goods, pointing to Beijing's alleged abuse of trade practices. These measures were followed by several more rounds of tariffs, with China always responding in kind and slamming Washington for its actions. By now, both states have slapped tariffs on over $500 billion worth of goods.
