The View | Donald Trump signals interest in a China trade truce, but it may already be too late for the global economy

Has the sharp decline in America’s stock market – still down almost 9 per cent from its peak at the beginning of last October, despite a fierce rally since Christmas – given President Donald Trump a stronger incentive to strike a trade deal with China?

Having treated the benchmark S&P 500 index as the best measure of his administration’s performance, Trump has been rattled by the recent slump in America’s once-resilient equity market, according to White House officials, and is reportedly more willing to de-escalate the conflict.

An article in The Wall Street Journal last Thursday suggesting that Treasury Secretary Steven Mnuchin was mulling scaling back tariffs on Chinese imports, coupled with a subsequent report by Bloomberg claiming that China has proposed measures to eliminate its trade surplus with America, are fuelling optimism in markets that a trade truce is at hand.

Leaving aside the strong resistance to a climbdown on tariffs from the trade hawks in the administration and the much bigger challenge of resolving the underlying problems bedevilling US-China relations, any easing of tensions in the coming weeks will do little to reverse the slowdown in the global economy over the past year.