U.S.-China deal a tactical retreat; far from peace, says Macquarie
Macquarie analysts said in a note Monday that they believe the latest U.S.-China trade agreement marks a “mutually agreed-to tactical retreat,” not a durable peace, despite the positive market reaction and the easing of tariffs, News.az reports citing Xinhua.
The temporary “deal,” announced over the weekend following talks in Geneva, includes a significant reduction in tariffs for 90 days.
The United States will lower its additional import tariff on Chinese goods from 145% to 30%, while China will reduce its tariff from 125% to 10%, starting May 14.
However, Macquarie noted that many of the Trump-era tariffs will remain, and new levies such as the 20% U.S. "fentanyl tariff" and China’s 4% retaliation tariff will still apply.
Macquarie emphasized that while this agreement reduces the immediate risk of a global slowdown, “the U.S. has not abandoned its desire or intent to slow or stop China’s rise to primacy in global economic, political, and military matters.”
The firm also questioned the sustainability of improved relations, warning that the damage from previous confrontations still lingers.
“The view of the U.S. as a ‘full faith and credit’ counter-party won’t return soon,” it said, suggesting that countries may continue to diversify away from the U.S. to mitigate future risk.
Macquarie noted that communication lines between the two nations have reopened and that a quick consensus was reached in Geneva.
They added that the next 90 days may see negotiations over potential Chinese purchases of U.S. goods and further easing of fentanyl-related tariffs.
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