GUIDANCE

The U.S.-China Trade War Is on Hold. Now the Hard Part Begins

Dec 7, 2018 | 00:59 GMT

A Chinese newspaper on display at a newsstand in Beijing on Dec. 3, 2018, features a front-page story about the Group of 20 meeting between Chinese President Xi Jinping and U.S President Donald Trump in which the two leaders agreed to a trade truce.

A Chinese newspaper on display at a newsstand in Beijing on Dec. 3 features a front-page story about last week's meeting in Argentina during which Chinese President Xi Jinping and U.S President Donald Trump agreed to a trade truce. China has signaled that it will try to meet some U.S. demands, but there are many reasons to doubt that the truce can be sustained.

(GREG BAKER/AFP/Getty Images)

Highlights

The truce in the U.S.-China trade war opens up a period of talks that already have both sides working to set expectations and control the narrative, with China considering its options for concessions and the United States weighing what it will accept.
On intellectual property issues, market access and state-owned enterprise reform, the overlap between China's domestic changes and U.S. pressure means there is space for Beijing to offer low-hanging fruit in negotiations.
However, such common ground will take the two sides only so far, and U.S. demands could easily derail the negotiations.
Ultimately, the way the talks will unfold hinges on whether the White House feels compelled to accept easy concessions as a political win or whether it will maintain its focus on its trade deficit and long-term strategic competition with China.

The next 90 days will tell whether U.S. and Chinese negotiators make enough headway on the trade differences between them to convince the White House to forego further rounds of tariff escalation. While there are areas of alignment between the two that will allow China to make some obvious concessions to U.S. demands, the question will be whether enough progress can be made in the upcoming talks to persuade the White House to either call off its trade war or extend the bargaining period -- or whether it will once again take up tariff hammer and resume battering the Chinese export economy....

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