Winston Churchill is credited with saying that, “Jaw jaw is always better than to war war”. How right was he? US President, Donald Trump, and China’s President, Xi Jinping, have agreed not to impose new trade tariffs in January 2019. China has also agreed to buy a “very substantial” amount of agricultural, energy and industrial goods from the US. There will be further talks between both sides to iron out all their differences. However, the details of the agreement are vague and both sides have different narratives. This is not surprising as both Donald Trump and Xi Jinping need to present a ‘victory’ for their domestic audience.
Just when you thought a full-scale trade war had been averted, up pops the arrest of Chinese telecoms giant Huawei’s chief financial officer in Canada, who could face extradition to the US over possible violation of sanctions against Iran. It must be stressed that although the US will not implement the increase in tariffs from 10% to 25% in January, it is merely a postponement and the threat of a full-scale trade war remains a key economic risk for 2019. A full-scale trade war is in no one’s economic interests and there will be no winners. Hopefully, the trade talks will lead to an agreement. At least no one has tweeted, “Peace in our times”!