Sino FileIn the Year of the Rat, the US-China trade deal will not usher in a season of goodwill

The interim accord has not completely prevented a full-blown trade war between the world’s two largest economies

Nor does it address the rapid deterioration in Sino-US relations, amid their increasing divergence in geopolitics, strategic goals and ideologies

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Chinese Vice Premier Liu He and US President Donald Trump sign the trade agreement on January 15. Photo: EPA

Published: 11:00am, 26 Jan 2020Updated: 11:00am, 26 Jan 2020

The signing of the long-awaited first trade deal between the United States and China brings the welcome hope that their trade relations might stop worsening after nearly two years of destabilising confrontation and costly tit-for-tat conflict. But the interim accord does not completely prevent a catastrophic, full-blown trade war between the world’s two largest economies, as their decoupling remains a concern.

At this stage, both nations might shift the battleground from the negotiation table to on-site verification of the accord’s implementation. But it will be a challenge for this modest agreement to last, as the enforcement of each item contains a potential point for friction.

That is why the deal forestalls further escalation rather than scaling back punitive measures, as tariffs mostly remain in place as pre-emptive measures to ensure it is enforced.

Despite the deal, the Trump administration has kept its 25 per cent tariffs on US$250 billion of Chinese exports and 7.5 per cent tariffs on a further US$120 billion of exports. Clearly, with punitive tariffs still imposed on two-thirds of Chinese exports to the US, Washington wants to maintain an American stick hovering over Beijing should it not follow through with its compromises.