The only thing worse than a bad US-China trade deal would be none at all. Until last weekend, when President Donald Trump tweeted his anger at China’s alleged backtracking and unleashed a new round of tariff escalation, the two looked on course to reach agreement. Few expected it would amount to more than a truce in the growing rivalry between the world’s two biggest economies. But it would nevertheless have been better than further deterioration.
Even that insipid outcome now looks to be in jeopardy. Mr Trump’s tariff jump — from 10 per cent to 25 per cent on $200bn of Chinese imports — will start to bite in about three weeks, which is the average shipping time for Chinese goods. That gives them a window to pull back from a trade war that would damage the global economy.
It will be easier said than done. Mr Trump believes he has more cards to play than the Chinese. America’s first-quarter growth of 3.2 per cent and a buoyant stock market (until last week, when trade war fears prompted a sell off) have fuelled Mr Trump’s belief that America has more cushion against a fallout than China.