No one’s tweets move markets like Donald Trump’s. After the US president confirmed he was postponing lifting punitive tariffs on $200bn of Chinese imports to 25 per cent thanks to “productive” trade talks, everything from global equities to oil prices and the Australian dollar rose. Progress towards a deal is welcome. But this is far from the end of the story.
Any agreement to end the seven-month trade skirmishing between the two sides over US accusations that China forces companies to hand over trade secrets and steals foreign technology would be a positive step. Even a bad deal, if it prevents an all-out trade war, is better than no deal. With signs of growth slowing on both sides, it is in the interests of Mr Trump and China’s Xi Jinping to rein in the tensions.
But there are reasons for markets to contain their exuberance. One is that, beyond the fact that memorandums of understanding are being discussed covering key areas — though Mr Trump publicly instructed his trade representative, Robert Lighthizer, that he wants a “contract” — the details of a deal remain unknown. The extent to which it can defuse longer-term tensions between Washington and Beijing will depend on the detail, and whether it can be implemented and monitored.