The US and China which looked like starting a global trade war have retreated assuring good relations between the two countries through bilateral talks. The two sides pledged to keep talking about how China could import more energy and agricultural commodities from the US to reduce the $335 billion annual US goods and services trade deficit with China. China should be the major beneficiary which has obtained a reprieve from the threatened tariffs on $50 billion of its exports to the US as well as a lifeline for ZTE Corporation, a major company because of promises of greater imports by China. The shadow over intellectual property rights appears to have receded. US agricultural products, mainly beef and energy like liquefied natural gas could add between $60 billion and $90 billion over a period of years which is for less than $200 billion reduction in China’s trade surplus that President Donald Trump had asked for. China has agreed to buy massive amounts of additional farm /agriculture products. That will make US farmers reasonably happy.
Of course, some in US business circles have viewed the cooling off between the US and China with disapproval calling the action premature. James Zimmerman, a former chairman of the American Chamber of Commerce in China has described the US retreat as a lost opportunity. However, the blowing away of any apprehension about a coming trade war should stabilise stock exchanges globally.