A truce on trade-but who has gained the upper hand?

When Donald Trump launched his trade war against China in April, threatening tariffs as high as 145%, the Chinese government said it would never bow to blackmail and vowed to “fight to the end”.

- Patrick Wintour

The question is whether the consensus reached between Trump and Xi Jinping in Busan, South Korea, last Thursday means the fight has come to an end, and if so on whose terms.

Trump rated it as a 12 out of 10 meeting. Both sides have taken some of their biggest guns off the table, but this appears closer to a truce than a durable peace setting stable boundaries for China’s relations with the US. Nevertheless the outline of a broader long-term diplomatic relationship is visible, with announced reciprocal visits by each leader within a year. That is very different to what China hawks in Congress were hoping when Trump came to power, and will set alarm bells off on both sides of the aisle.

One of the difficulties has been that Trump’s strategic objectives in launching the trade war were not articulated - the balance between protecting traditional US manufacturing, ring-fencing modern technology-based industries critical to US national security, punishing Chinese trade practices, or more broadly overpowering China as a competitive threat, was fudged. Gradually the battle morphed in some US administration minds from a trade war into a geopolitical trial of strength between the superpowers, a trial that left the whole world awaiting its outcome.

As a result it has been a turbulent six months, involving undulating tariff rates, export curbs, threats, counterthreats, deferral and monopolies inquiries, interspersed with five rounds of trade talks ranging through Madrid, London, Geneva, Stockholm and Kuala Lumpur, culminating in two hours of direct talks between Trump and Xi, the first meeting between the two men since 2019.