Chances of interim US-China trade deal around even as Beijing dampens expectations

The latest round of trade negotiations between the US and China—the first since May—are set to begin in Washington today.

us china trade negotiations

Photo: AP

The latest round of trade negotiations between the US and China—the first since May—are set to begin in Washington today.

Despite months of trade talks between the two economic superpowers, tensions are yet to de-escalate. Indeed, combative rhetoric has heightened in recent days amid reports that the Trump administration is exploring ways to limit American investments into China, including by delisting Chinese companies from US stock exchanges.

The outcome of this week’s discussions may provide hints at the likelihood of an interim trade deal. However, on Sunday, China’s lead negotiator and Vice Premier Liu He quashed expectations of a comprehensive agreement, saying Beijing will not offer commitments on reforming its industrial policy or government subsidies—key Trump administration demands.

An interim deal would likely include the US delaying further tariffs and approving licenses for US companies selling inputs to Chinese telecom giant Huawei. In exchange, China is likely to offer to purchase more US agricultural products.

While analysts suggest postponing tariff increases is probable, the chances of reaching an interim deal sit at about 50%. Status quo trade tensions have dampened global economic outlooks—and postponing further tariff increases are unlikely to generate much confidence. With US tariffs on $250 billion worth of Chinese goods scheduled to rise to 30% on October 15, investors will be looking for an interim deal as a sign that the trade war may be drawing to an end.

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