US-China tariff pause eases trade tension

Global supply chains can exhale

- WICHIT CHANTANUSORNSIRI

The temporary agreement between the US and China to slash the severe reciprocal tariffs imposed on each other and to cooperate to prevent further disruption to the global economy should have a positive impact on trade, according to an analyst.

The move should ease the strain on global supply chains, which faced uncertainty as shippers did not know whether their goods would be accepted due to the US tariffs.

However, uncertainty will remain until the two nations hold a second round of negotiations, said Sompop Manarungsan, an analyst covering the Chinese and US economies.

“The temporary agreement on tariffs has left many countries including Thailand feeling both relieved and concerned,” he said.

“The relief stems from a clearer stance between the two largest adversaries in the tariff war. However, the concern is related to uncertainty about the second round of talks.”

According to Mr Sompop, the agreement helps stabilise the global supply chain and reduces negative impacts on the logistics system, including inventory management, as businesses stocked up before the tariffs came into effect.

Marketing management should also become easier, referring to the trend of consumers hoarding goods because they were worried prices would rise due to the tariffs, he said.

The pact also affects transport systems, which had been congested during this period, said Mr Sompop.

The US tariffs also affected demand in the US, leading to product shortages on store shelves.

In the financial sector, the measures have diminished the US's status as a safe haven, as capital outflows from the US over the past few months strengthened other currencies, such as the yen, Taiwanese dollar and the baht.

China was also affected, particularly its small and medium-sized enterprises (SMEs).