Chinese and Americans have partially buried the war axe on tariffs. The 145% rate on Chinese products entering the US is lowered to 30% and the 125% rate for US products in China is lowered to 10%.
This protocol is in place for 90 days, time to discuss and reduce the risk of escalation.
Good news and all the better if we can avoid a blaze that would be detrimental to all.
Two remarks
1 – 30% is not an innocuous rate for the US consumer and for companies. Of course, this is significantly less than the 145% rate that was lunar and validated a high risk of recession, but it remains high. This will have an impact on inflation and activity dynamics even if it now removes the risk of a recession.
2 – This does not solve the issue, for the Americans, of China’s technological competition. This was the initial fight of the White House, it is not resolved. For Washington, the challenge is to innovate enough not to suffer from this very strong competition. But is this viable in an economy that aims at isolationism?
Lowering tariffs is a pause but not the end of tensions between the two countries.