Trump and Xi get talks back on track, but trade deal remains distant

Trump and Xi get talks back on track, but trade deal remains distant

01/07/19

Luke Foddy, Communications Manager

Markets have responded positively to Saturday’s G20 meeting between President Trump and President Xi, but there remains some distance to travel before a meaningful deal is struck.

The two presidents met in the sidelines of the G20 in Osaka on Saturday and seem to have brought negotiations back on track, Reuters reports. President Trump told reporters that the threat of new tariffs has been shelved and signalled that US companies will be allowed to trade with Huawei – the Chinese telecoms giant that has been drawn into the heart of US-China tensions.

Markets rallied on the news that negotiations will resume, the Financial Times reports, but analysts have warned that the fundamental differences between the two economic powers remain. The South China Morning Post described the summit as ‘more symbolic than successful in addressing the deepening trust deficit and other problems at the heart of the US-China stand-off.’

According to CNN, ‘uncertainty about whether a meaningful agreement can be finalised could loom over markets in the second half of the year,’ while businesses in the US welcomed the course-correct on negotiations, but called for an “enforceable deal,” to be made, CNBC reports.

Chinese media also highlighted the challenges ahead. A China Daily editorial over the weekend stated, ‘although the negotiations are set to reopen where they left off — rekindling hopes of a deal — there is no avoiding the fact that the outcome of their Saturday meeting is still very much like the one the two leaders produced in Argentina in December, another cease-fire.

‘While avoiding the worst-case scenario and allowing more time, and thus a greater likelihood of maneuvering a deal, Saturday’s agreement is no guarantee there will be one.’

After all, existing tariffs remain in place, hitting businesses, while the fundamental issues over tech, including IP rights and forced technology transfers, remain unresolved.