‘Chinese will have to be careful’: US trade truce may come, but risks remain

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.

And while the Iran crisis has added uncertainty, its probable impact on any US-China deal is expected to be minimal.

  

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