In a surprise step, the United States and China announced a temporary reduction in customs duties for a period of 90 days, in a joint statement issued by Geneva.
The move aims to reduce trade tensions between the two giants and make room for new negotiations, which the markets welcomed with caution, amid questions about the actual impacts on the global economy.
Washington reduced fees on Chinese imports from 145% to 30%, especially those related to Fintanel, while Beijing responded by reducing its fees from 125% to 10% on American goods.
This truce seems an attempt to contain a possible escalation, especially after Trump’s recent statements that brought the specter of trade war to the fore.
US Treasury Secretary Scott Besent confirmed the refusal to decipher the economic connection with China, pointing to fruitful dialogues that included the creation of a permanent mechanism for discussions.
However, fundamental issues such as commercial impotence and purchase obligations are still unleashed.
The markets witnessed an immediate relief after the announcement, the Chinese stocks rose, and the return of the American treasury bonds jumped to the highest level in a month, reflecting expectations for improved growth or inflationary fears.
Multinational companies will also benefit from lowering fees, while countries such as Vietnam and India face renewed competition with China’s return as a low -cost resource.
Reducing fees may contribute to reducing inflation, especially in the United States, which reduces pressure on the federal reserve on interest rates. If trade stabilizes, global central banks may adopt more flexible policies to support growth.
But commercial fees wars represent a history of complications. In 2018, the two parties agreed to “freeze” the conflict, but the United States declined quickly, which led to an escalation that lasted 18 months.
The first phase agreement (2020) is partially failed due to China’s lack of commitment to increasing its purchases from the United States, and the rise in the American trade deficit during the pandemic to $ 355 billion in 2022.
Perhaps one of the most important fears about the steadfastness of this agreement is to demand China to cancel all American customs duties imposed since 2023, while the United States insists on reducing the trade deficit, and the absence of a clear mechanism for imposing sanctions in the event of violation weakens the effectiveness of the current agreement.
If the negotiations succeed in resolving the points of disagreement, we may witness a new era of commercial cooperation, with reforms in issues such as intellectual property and government support for Chinese companies, but history indicates that temporary agreements are subject to collapse.
The American -Chinese agreement represents a step towards temporary stability, but it does not solve the structural roots of the conflict.
While hopes for the improvement of the global investment climate, the risks remain with the continuing differences on trade deficit and industrial policies.
The next 90 days may be a last chance to avoid the return of the trade war, or just a short truce in a long -term conflict. The biggest question: Is it possible for the two divisions a balance between competition and cooperation without raising a global economic earthquake?
