A Welcome Thaw

Countries like India will be hoping the fine print of the US-China trade deal doesn't leave them worse off

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The truce between the US and China on reciprocal tariffs is something of a comedown for the former, given how the Trump administration has been repeatedly refuting any possibility of backing down on its decision to impose high import levies on Chinese goods. The more conciliatory and accommodative effort in Geneva suggests there may have been some reassessment of the potential damage that these high import levies could cause on inflation and consumer demand.

Subsequent analysis may have resulted in the realisation that it might not necessarily be China which may "suffer more" from the trade war. The contraction in US gross domestic product in Q1, the prospect of a recession in the US in the second half of the year, and also the fact that the US Federal Reserve is in no hurry to cut interest rates, are all factors that would have weighed on the minds of US policymakers.