How the U.S.-China Trade War Reached a Turning Point

Since December, a truce has kept the trade war between the world’s two biggest economies from escalating. Under the agreement between U.S. President Donald Trump and Chinese President Xi Jinping, the U.S. postponed indefinitely a threatened increase, to 25 percent from 10 percent, in tariffs on almost half the goods it buys from China, worth some $200 billion. American and Chinese officials have been negotiating since then. The dispute has already shaken the world economy and caused companies to reconfigure their supply chains. Even amid rising expectations for an agreement, the International Monetary Fund warned that the global economy remains vulnerable to trade tensions and urged governments to be “very careful.”

1. What progress has been made?

China has agreed in principle to increase imports of U.S. agricultural products, along with energy, industrial products and services, as part of a path to eliminate its imbalance in trade with the U.S. That promise might form the basis of a preliminary agreement. Treasury Secretary Steven Mnuchin said in April that the U.S. and China were “hopefully getting very close to the final round” One option on the table is for China to shift some punitive tariffs on agricultural goods that it imposed in 2018 to other products, helping Trump to sell any eventual trade deal to farmers ahead of the 2020 election.

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Forwarded From www.washingtonpost.com