US-China Trade War Update: 26 August, 2019

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Vice Premier Liu He,China’s senior negotiator for trade has publicly announced that China is willing to resolve the trade dispute with the United States through negotiation. Liu also stated that his country opposes an escalation of the trade war now underway. The composed gesture coming from Beijing was answered by President Trump at the G-7 summit underway in France. Trump went as far as to predict that a trade deal will be reached with China at some point in the near future. It remains unclear whether today’s gestures reflect sincere intentions or if they are simply water on the fire. Last week’s wave of new US and Chinese tariffs sent global markets into spasms. Monday’s conciliatory words helped to calm markets, however, the current trade situation between the United States and China remains volatile.

Trade talks are expected to resume in Shanghai next month. Expectations will be high even though both Washington and Beijing will likely remain cautiously optimistic about the chance that further talks will bring an end to the trade war. Suffice to say, it would be in Beijing’s best interests to bring the trade matters to an end soon given what’s happening in Hong Kong, as well as recent issues in the South China Sea. China cannot move decisively in either area while the eyes of the world remain fixed on it. Beijing understands this, yet there are factions in the government that favor taking a harder line in the next round of trade discussions.

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