Over the weekend, Treasury Secretary Steve Mnuchin declared that the trade war between the United States and China would be put “on hold.” This followed both a round of negotiations with a top Chinese official in Washington as well as several days of public hearings on the potential damage to U.S. industries that would follow the imposition of tariffs.
It is certainly worth celebrating the avoidance of a full-blown trade war, but there are two important caveats to keep in mind. First, this looks more like a temporary truce than a lasting resolution. Not only is there conflict within the administration on its China stance, but the administration’s precedents on trade truces are not encouraging. It has reached deals with China before, only to have tensions quickly reemerge.
And, in a different corner of the trade world, the administration’s temporary exclusion of many countries from its ‘national security’ steel and aluminum tariffs turned out to be a mere interlude before it demanded the ultimate imposition of quotas. So the China peace may be short-lived.
Click to continue reading this Forbes article.