Trump's 90-day armistice unlikely to end trade war with China

Lack of a coherent message between Beijing and Washington after G20 Summit leaves plenty of room for skepticism of new agreement

G20 Summit meeting between Xi and Trump

G20 Summit meeting between Xi and Trump (AP photo)

TAIPEI (Taiwan News) – In the wake of the temporary ceasefire announced following the G20 meeting of U.S. President Donald Trump and China’s Chairman Xi Jinping, some analysts are urging caution, and declaring that the trade-war is far from over.

Although global markets jumped slightly on Monday morning at the news that trade could be expected to remain steady for at least the next 90 days, there are a few tell-tale signs that the current agreement is far from conclusive.

First is that there was no joint statement issued by the delegations from Beijing and Washington, which provides both sides with a bit of political cover to claim what they want from the meeting.

Notably, the official message initially released to Chinese media by the Beijing made no mention of the 90 day freeze on new tariffs. Just as telling, the official statement from the White House made no mention of Taiwan or the “One China policy.”

Likewise, Beijing’s statements do not include any word on IP theft or forced technology transfers, key concerns of Washington, while U.S. statements to do not actually mention any plans of removing the tariffs already in place.

Speaking to CNBC on Monday following the meeting, a senior advisor at McLarty Associates, Steve Okun declared “This is not a truce, this is not an armistice.”

Noting that the original tariffs remain in place, Okun also cautioned that there is as yet no clear indication of what the two governments hope to accomplish within the coming 90 days.

Dutch Bank ING released a statement following the meeting on Sunday declaring that an agreement to address all the major problems between the U.S. and China in areas of trade, manufacturing, and finance would take years to negotiate.

The ING note was quoted by CNBC.

“90 days to work out a broad agreement is very short. Especially because the agreement should also encompass a deal on more sensitive issues like the theft of intellectual property and forced technology transfers in joint ventures. Most wide-ranging bilateral trade agreements take years to negotiate.”

Such a comprehensive agreement, even if drafted, would also take years to actually implement. It is also worth mentioning, that some if not all of Trump’s cabinet advisors feel there is little to no basis of trust in dealing with Beijing.

While some analysts are positive about the prospects of a potential deal, others point out that the mismatch between the messages coming from Beijing and Washington, as well as between White House staff officials, could indicate that the trade conflict is far from finished.

Many observers have speculated that the trade war is only the beginning in a widening shift between the U.S. and China that could last years or even generations to settle.

Mike Pence at the APEC conference declared that the U.S. was prepared for a long and sustained conflict with China, until they could change their ways with respect to unfair trade strategies and disingenuous foreign policy.

"We have great respect for (Chinese President Xi Jinping and China), but as we all know, China has taken advantage of the United States for many, many years, and those days are over."

In light of such comments and the murkiness surrounding the recent G20 armistice agreement, investors and businesses should remain cautious.

While the world can continue to hope for trade markets to stabilize, as Taiwan envoy to APEC, Morris Chang declared in mid-November, countries should not be optimistic about the future of the trade conflict.

The current agreement has provided both Trump and Xi with a bit of breathing room for their respective national economies, but given the enormous breadth of issues to be addressed, it would be premature to assume the trade war will be resolved within 90 days.