Global Macro Service > Research Briefings > China

A good dinner, in Buenos Aires

The surprisingly constructive Trump-Xi meeting in Buenos Aires has brought a truce to the US-China trade war, with positive comments from both sides. Higher tariffs have been put on hold for three months while negotiations take place on China’s policies. According to the US side, China has also agreed to buy a “very substantial” amount of agricultural, energy and industrial goods.

The positive outcome seems to have largely resulted from a change of heart on the US side, while it is also possible that China has hinted at a willingness to change certain aspects of the “Made in China 2025” plan. With the truce probably mostly due to a (possibly temporary) change of mind in the US, and room for agreement on much of the substance rather narrow, it is fragile. Nonetheless, the postponement of tariff hikes and the resumption of dialogue and negotiations are a positive, for the economy and asset markets alike.

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