The trade war is not over

For days we had been hoping to get to the heart of the matter, following the lavish welcome that US President Donald Trump extended to Chinese leader Xi Jinping. And as anticipated by some White House officials in recent days, the substance of the dialogue between Washington and Beijing emerged yesterday, though it primarily concerns the US economy, at a time when Trump’s approval rating is falling as never before and just a few weeks before the mid-term elections – according to the latest Wall Street Journal poll, Trump’s approval rating has fallen to 37 per cent, the lowest ever recorded for a president shortly before the mid-term elections in the polls the newspaper has been conducting since the time of former President George H.W. Bush.

The US-China Board of Trade announced yesterday that US$30 billion worth of American exports to China (around 30 per cent of total exports to the People’s Republic) and US$30 billion worth of Chinese imports into the United States will be subject to more favourable tariff treatment. Beijing will cut tariffs on maize, wheat, sorghum, meat, dairy products and vegetable oils, as well as fish, timber, cosmetics and medical devices. Soya, however, is not on the list, and this is a politically interesting detail because it is one of the major US agricultural exports – perhaps a sign that Beijing wants to keep that card up its sleeve to continue negotiations. The United States will cut tariffs on small household appliances, toys, Christmas decorations, fireworks, household linen and child car seats. There is also a Chinese commitment to purchase 10 million tonnes of American coal per year in 2027 and 2028, and a working group on agriculture will be set up, but there is still no timetable for implementing the reductions, and the broader trade agreement has essentially been postponed until next year. In short: hot air and promises of dialogue. All of this serves to buy time, which is useful for the Trump administration and for Xi Jinping’s comeback.