A pause that refreshes? What’s ahead for US-China tariffs and trade talks

After months of chest-thumping, accusations and threats, look for US-China trade relations to weather an uneasy pause as the giants retreat from extremist positions, guard against backtracking and alter the negotiating dynamic toward an eventual agreement, analysts and former US officials say.

The breather follows this month’s London sit-down after the two engaged in a high-stakes tariff battle then went for each other’s jugulars, with China blocking rare earth exports and Washington choking off jet engines and semiconductor software.

“Absolutely the trend lines point in the direction of a truce, a pause, a respite in US-China tensions,” said Jeremy Chan, a senior analyst at Eurasia Group. “We’re seeing signs of short-term stability that weren’t there even a month ago.”

The pause, which went into effect on May 12, is set to last three months if it is not extended. That is likely to result in US tariffs being capped at 55 per cent and China’s at 10 per cent, according to analysts, with Washington using the hiatus to ensure that Beijing resumes rare earths exports and Beijing seeking more organised negotiations to moderate Trump’s unpredictable approach.

“The blow-up in the Middle East will not materially add to the already aggravated state of US-China ties,” said Sourabh Gupta at the Institute for China-America Studies in Washington. “It will be limited to loud rhetoric.”

That said, the lull is fragile, tactical and heavy with suspicion, especially given that it took top-level meetings – first in Geneva, then in London – and a telephone call between Chinese President Xi Jinping and US President Donald Trump to avert a free fall in relations.

South China Morning Post