What are the key takeaways on global trade from the latest G20 meeting?

US and China reached a temporary deal for now, after a “highly successful meeting” according to the White House. More details will emerge in the coming days and weeks but, based on official reports from both sides, we view this deal as temporary, rather than the end of the trade war. At the same time, this is very meaningful for China and the world economy. Both sides are aware that to ultimately solve the ongoing disputes, more time will be required, as many complex issues are at stake.

The G20 has made some progress in the US/China relationship. At least for now, there are higher hopes for US/China to find a solution. Not only was an increase in tariff rates in January 2019 paused but the risk of an additional tranche of tariffs on the rest of US imports from China ($267bn) has also been delayed. Based on Chinese report by Xinhua, a top official media, there is a possibility that tariffs which have already been implemented could be removed. However, this is, in our view, very unlikely. If Trump seeks to maintain pressure on China, it is unlikely that already implemented tariffs would be abandoned during the negotiation period, unless China significantly increases its imports from the US.