US-China tariff truce offers hope for resolution on fentanyl and other issues

The global economy breathed a collective sigh of relief as China and the US stepped back from the brink of a damaging trade decoupling.

The better-than-expected results from their Geneva negotiations sent ripples of confidence through financial markets. Yet beneath the surface optimism lingers the sobering reality that this is merely a 90-day reprieve rather than a lasting resolution.

Given the intricate and often contentious nature of their economic interdependence, the prospect of a sweeping agreement before the August deadline remains slim.

Though the US has scaled back its tariffs on Chinese goods from the prohibitive 145 per cent – effectively a trade embargo – the remaining cumulative tariffs hovering around 50 per cent still cast a long shadow over bilateral trade.

Nevertheless, there are reasons for cautious optimism. The truce signals that neither side is willing – nor prepared – to sever economic ties completely.

During my visit to Washington last week, I learned from the organiser of a closed-door discussion with business leaders that most expect tariffs on Chinese goods to either hold steady or decrease further once the 90-day period lapses.

South China Morning Post