U.S. President Donald Trump has called the phase one trade deal with China “very substantial” — but analysts say it appears to be more of a “temporary truce” than a real deal.
They say it doesn’t sufficiently touch on the thorny issues plaguing both sides, and warn that negotiations could break down again before the phase one agreement is drafted.
The trade dispute between the U.S. and China has gone on for more than a year and after their 13th round of talks last week, Trump said Friday that both sides have reached a phase one deal, and it will be written over the next three weeks.
The U.S. also agreed to suspend a tariff increase on at least $250 billion in Chinese goods to 30% from 25%, which would have taken place on Tuesday. Plans for another hike set to kick in on Dec. 15 remain in place.
“We think the ‘substantial’ first-stage trade deal made by Trump with China looks more like a truce than a genuine deal,” said Christiaan Tuntono, senior economist for Asia Pacific at Allianz Global Investors.
Economists at Macquarie Capital echoed the same view and called it a “temporary truce.”