It was the ceasefire global policy makers and investors were hoping President Donald Trump and his Chinese counterpart Xi Jinping would reach in a turbulent trade war that has sparked global market turmoil.
Yet the outwardly positive agreement between the leaders of the world’s two economic superpowers to halt further escalation in tariffs and continue negotiating to reduce trade imbalances – hailed by Trump as “an incredible deal” – was seen by many US-China experts as another punt by the two countries in a year-long trade negotiation that leaves unresolved deep issues between the two countries.
“It was a postponement,” said Craig Allen, president of the US-China Business Council. “It is certainly not any resolution of any issue. But it’s better than the situation we had before. Now we wait and see.”
Saturday’s agreement on the sidelines of the G20 summit in Argentina set up yet another deadline by the Trump administration to broker a deal with China to address top US concerns like forced technology transfer, intellectual property and cyber-theft within 90 days.
It’s unclear exactly when that clock would start, but it’s anticipated to jump-start a series of fast, intense negotiations between both countries to work out the details of a broad strokes agreement brokered by the two presidents over a two-and-a-half hour steak dinner.
“The hard work begins now,” said Myron Brilliant, executive vice president and head of international affairs for the US Chamber of Commerce, in a statement.
The statements issued by the two sides, while each positive, illuminated how far apart Washington and Beijing remain despite each country’s leader boasting about their strong personal relationship.
The starkest difference was the omission in China’s statement of any agreed upon timetable for negotiations.
Also absent was specific mention of what markets China would be inclined to open up – like agriculture, energy and industrial US products – three sectors touted by White House Press Secretary Sarah Sanders in her brief statement on Saturday.
Trump repeatedly referred to agriculture – a flag, perhaps, to US soybean farmers who have been the first to feel pain from Chinese retaliation. “China will be buying massive amounts of product from us, including agricultural, from our farmers – tremendous amount of agricultural and other products,” Trump said.
“Going down the line, you can see what was left ambiguous,” said Allen, who viewed the absence of a joint statement as yet another signal of an unclear understanding from both sides.
China’s statement also didn’t mention Xi’s willingness to consider approving a $44 billion deal for Qualcomm Inc. to purchase NXP Semiconductors NV, if the deal was put before him again – a gesture the White House lauded as an achievement over dinner talks. In July, Qualcomm scrapped the proposed deal for its rival chip maker after waiting nearly two years for approval from Chinese regulators as tensions escalated between the two counties.
The one area of shared agreement between the two countries was on fentanyl, a substance that has been tied to an epidemic of overdose deaths in the United States, which been a top priority issue for the Trump administration.
After years of negotiations dating back to President Barack Obama, China finally agreed to designate the synthetic opioid fentanyl as a controlled substance – meaning sellers would be subject to the maximum penalty under the law. Officials in Washington believe China is the primary source of fentanyl found within US borders, following a 2017 US Congressional report citing law enforcement and drug investigators.
The President declared the opioid crisis a public health emergency last year and whatever the final arrangement on trade, a commitment from the Chinese to crack down on fentanyl would be a win he can point to for his Republican base. White House counselor Kellyanne Conway, who is overseeing the White House’s opioid response, told reporters ahead of the President’s trip that shipments of fentanyl, which has resulted in the deaths of 30,000 Americans last year, “had to stop.”
“That’s like a plane falling from the sky every single day,” she said.
Two powerful trade lobbies in Washington – the US Chamber of Commerce and the Business Roundtable – which represent companies like Walmart Inc., Target Corp., and Procter & Gamble Company, welcomed the decision by the administration to set aside applying further tariffs as the “right course of action.”
More than 100 S&P companies have already pre-emptively telegraphed during third quarter earnings calls the damage further tariffs would impose on the US economy. Some companies like Walmart, the country’s biggest retailer, have warned that prices on everyday goods like shampoo, detergents and paper goods like napkins will get more expensive for consumers.
Still, analysts cast doubts over what was achievable over the next three months, suggesting it would be unlikely for both sides to reach a substantial breakthrough ahead of the next deadline.
“We’ve been here before,” said Paul Ashworth, chief US economist for Capital Economics in a research note, referring to a May deal negotiated by Commerce Secretary Wilbur Ross that included a pledge to buy more US energy and agricultural products, which the President ultimately vetoed. “We suspect since he negotiated this deal himself, Trump will be much more reluctant to torpedo it when his own personal reputation is on the line.”
Ross was notably absent from the US delegation in Argentina, which included Trump’s hardline China trade adviser Peter Navarro and top trade negotiator Robert Lighthizer , s well as more moderate figures like Treasury Secretary Steven Mnuchin and National Economic Council director Larry Kudlow.
The president was quick, once aboard Air Force One, to celebrate his negotiating prowess.
“It’s a deal between the United States and China made by the President and the President,” he told reporters.
But Trump acknowledged nothing is yet set in stone, adding, “It goes down, certainly – if it happens, it goes down as one of the largest deals ever made. China right now has major trade barriers – they’re major tariffs – and also major non-tariff barriers, which are brutal. China will be getting rid of many of them.”
Scott Kennedy, deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies, said to achieve successful negotiations, there would need to be “clear consensus” of the goals by the Trump administration and “a more genuine interagency process.” Such a shift would come after months of clear division within the President’s cabinet between trade hawks like Navarro, and free traders like Mnuchin.
It will also befall China to set down a fresh starting point for negotiations in the weeks ahead as Beijing celebrates the 40th anniversary of reform and opening up. Such a moment, experts say, could offer Xi an opportunity to lay out a clear vision for a new wave of liberalization on his own terms based on the country’s own needs and political schedule.
“But they won’t take advantage of it in that way, and they could be back to the same period we were in three months,” said Kennedy, referring to both countries governments.