US and China reach a compromise — but the trade standoff is far from over

Chinese President Xi Jingping and US President Donald Trump during Trump’s Asia trip in November 2017.

Trump agreed to hold off increasing tariffs on $200 billion Chinese goods, for now.

The United States and China reached a modest compromise on trade on the sidelines of the G20 on Saturday. But the trade spat between the two countries is far from resolved.

President Donald Trump has agreed to temporarily hold off increasing tariffs on $200 billion in Chinese-made goods in exchange for China purchasing “a not yet agreed upon, but very substantial” amount of American-made products.

The two sides will intensify negotiations to resolve the key issues, including non-tariff barriers, intellectual property protection, cyber theft, and more, according to a statement from the White House.

On those more major issues, the gaps between the United States and China remain wide, despite the consensus Trump and Chinese President Xi Jinping reached over what they both called a “highly successful” working dinner in Buenos Aires, Argentina.

The meeting was indeed successful in that the two may have averted — at least for now — a deepening economic conflict between two of the world’s biggest economies. The tensions have hurt the global economy and worsened ties between the major powers.

Now comes the hard part of reaching a more comprehensive deal on trade. The US has already placed tariffs on approximately $250 billion in Chinese goods, to which China has responded in kind. As Michael Froman, America’s top trade representative from 2013 to 2017, told Vox’s Alex Ward, “Tariffs are very easy to put on, but very hard to take off.”

This isn’t a major deal. It’s more of a trade-war time out.

Both Xi and Trump made concessions in Buenos Aires to temporarily de-escalate this trade dispute.

Trump has agreed to delay increasing tariffs from 10 percent to 25 percent on nearly $200 billion in Chinese products. Trump had previously warned he would do so on January 1, 2019; instead, he will not make any changes for 90 days, in the hopes that a more lasting agreement can be reached, according to the White House statement.

In return, Xi agreed that China will buy more agriculture, energy, and other products from the US in an attempt to “reduce the trade imbalance,” the White House said. How much has not yet been determined.

The White House threatened that, if, after 90 days, no progress had been made, it will go ahead with those 25 percent tariff increase on $200 billion in goods.

There were some slight discrepancies in how Chinese officials sold the deal, as Bloomberg pointed out in a comparison of the statements issued by the White House and the Chinese Foreign Ministry. Most critically, the Chinese government statement did not explicitly mention the 90-day time window, though it says the two sides will “speed up” talks.

But this 90-day deadline is significant, as it really doesn’t give Chinese and American leaders much time to reach a breakthrough on complicated issues that have previously left the two sides at an impasse.

And experts are skeptical that this trade truce represents a legitimate headway. “On standard trade issues, this is where we were weeks ago,” Derek Scissors, a China scholar at the American Enterprise Institute and sometimes adviser to the administration, told the Washington Post.

How this trade standoff ends is still unclear

Both sides are selling this agreement as a sign of progress, but the big issues remain unresolved. What’s more, Beijing and Washington might not even agree on what a final deal on trade would look like.

The Chinese government said in a statement that both sides seek to reach a “mutually beneficial, win-win agreement.” But Trump’s previous demands of China sound less like a man in search of a compromise, and than one seeking total domination — basically, the opposite of “win-win.”

As Vox’s Alex Ward wrote:

But it looks like nothing short of complete capitulation by Xi will satisfy Trump. He said as much himself in the Wall Street Journal interview: “The only deal that would really be acceptable to me … would be China has to open up their country to competition from the United States. They have to open up China to the United States. Otherwise, I don’t see a deal being made.”

That fundamental disagreement shows the cracks in this latest compromise, and the looming challenges of reaching a deal and ultimately removing tariffs. Plus, Trump sees tariffs as the ultimate bargaining chip, and so far that strategy has proven fairly successful: Trump has his long-desired and now-signed United States-Mexico-Canada-Agreement (USMCA), the newly renamed and updated NAFTA. It doesn’t seem likely he’ll back down against China now.

Trump, on Air Force One leaving Buenos Aires, told reporters that if a deal happens with China, “it goes down as one of the largest deals ever made.”

There’s a long way to go to get to that point. The handshake deal at the G20 was a positive step toward resolving tensions. But this trade dispute could get worse before it gets better.

This article was originally published at Vox.com