US-China trade unpredictability likely to weigh on global economy
- Given large gaps between US and Chinese positions, deal ending trade war may not be possible before the end of the year, analysts say
- Uncertainty is causing businesses to postpone decisions, hurting investment and consumption
Unpredictable trade policies, mainly from the United States, are likely to continue to cast a long shadow over the global economy even after China and the United States agreed to resume their trade talks, analysts said.
The deal agreed by US President Donald Trump and his Chinese counterpart Xi Jinping on Saturday in Osaka included a promise from the US to not levy any new tariffs on Chinese goods and to ease the ban on US companies selling equipment and components to Chinese telecoms giant Huawei.
However, the existing US tariffs on US$250 billion of Chinese imports will remain in place, as will those already imposed by Beijing on US goods.
It is still too early to tell how trade and political tensions will evolve, but they are likely to continue to depress investment and economic activity for years to come, according to a report by the Bank for International Settlements, which has its headquarters in Basel, Switzerland.
Historically, it is not unusual to see surges of “sound and fury” from trade conflicts and the associated uncertainty that comes in the wake of the major economic shock waves the conflicts create, the report said.