Is a US-China trade agreement likely to hold? Don't count on it

Past experience and current reality should reduce optimism over a prospective deal between the two

- ANGELA ZHANG & ALEX S. YANG

The White House has announced that the US and China will temporarily suspend the import tariffs they imposed on each other in April, pending further negotiations on a trade agreement. But while the announcement offers long-awaited relief to businesses and has boosted market confidence, investors would be wise to curb their enthusiasm.

Taking cues from his background in business, US President Donald Trump uses tariffs as a bargaining chip, seemingly convinced that aggressive escalation will force US trade partners to offer significant concessions and enable him to declare a major political victory. But negotiating a trade agreement is not the same as striking a real-estate deal. The process is slower, messier and far more consequential.

This is particularly true when the US is negotiating with China, which has both a huge economy (and thus substantial leverage) and a strong interest in withholding concessions, because yielding to Trump's demands could undermine national pride and trigger a domestic backlash. And while Trump has a record of declaring dubious victories, it would be difficult for him to claim success in his trade war with China if he simply backed down. As a Chinese saying goes, once you are riding a tiger, it is difficult to get off.