Preston Stanley - Trade War Truce Unlikely to Bring End to Trade War

Preston Stanley: Pause on trade war may only provide temporary relief from global market uncertainty.

Although world markets reacted positively to news of a 90-day trade war truce between China and the U.S., during which time U.S. President Donald Trump has agreed to postpone a promised tariff increase on $200 billion worth of imports from China, analysts at Preston Stanley say the truce will probably not bring an end to the rapidly escalating U.S.-Sino trade tensions.

Following a meeting between U.S. President Trump and China's Xi Jinping on Sunday in Argentina, the countries announced that they would not take any further tariff actions for 90 days but analysts at Preston Stanley say the terms of the truce remain unclear with both countries offering a different version of what the truce means in real terms.

Trump has stated that China has agreed to purchase a significant amount of energy, agricultural and industrial products from the U.S. but China has made no mention of this condition of the agreement.

The 90-day period is supposed to allow time for negotiating a longer-term solution to the trade dispute which is causing devastating uncertainty for the global economy. Analysts at Preston Stanley say that while it is a positive step that the two countries' presidents are willing to enter discussions, it is highly unlikely that any concrete measures will be decided upon in such a short period of time.

When the initial reaction to the somewhat superficial good news wears off, Preston Stanley analysts believe the market uncertainty will prevail and that the truce may end up extending the trade war rather than helping to hasten its end.

Source: Preston Stanley