A weekend deal between the leaders of the U.S. and China will avert the imposition of new sanctions on January 1st, but it's hardly a long-term fix.
UNITED NATIONS — Dinnertime diplomacy between President Trump and Chinese President Xi Jinping over the weekend appears to have averted the imposition to stiff new tariffs previously scheduled for January 1.
China also agreed to treat the deadly opioid Fentanyl as a controlled substance and purchase more American goods. But beyond that, the trade “deal” remains something of a “he said — Xi said.”
“We don’t really know what was achieved this weekend.”
Phil Levy is a senior fellow for the global economy at the Chicago Council on Global Affairs.
“This, by my count, is deal number five between the Trump administration and the Chinese. Each time we come away and we say, ‘We’ll have trade peace in our time!’ And then we get surprised again a couple months later. I’m not sure this is going to be any different.”
The White House says China will have 90 days to prevent tariffs on $200 billion in goods from rising to 25 percent from a current 10 percent.
Between the U.S. holidays and Chinese New Year, Levy thinks its a bad time for diplomacy in the best of circumstances.
Then there’s the question of who exactly is leading negotiations on the U.S. side.
“If you go back to May of this year, Steve Mnuchin, the Treasury secretary, was put in charge of reaching a deal with the Chinese. The setup was essentially just like this. ‘Could we get some extra Chinese purchases? Were there some quick things we could do to avert the coming increase in tariffs?’ And it worked – they reached the deal, which the White House then renounced one week later, when a different faction, led by Peter Navarro, seemed to oppose it.”
So long as the U.S. keeps making bilateral demands of China that Beijing will struggle to agree to while still saving face, Levy thinks a trade breakthrough is out of reach.
That means the latest tariff truce could be over in a flash, with both sides once again eager to avert the pain of tariffs, if not ready to tackle the roots of their disagreement.