The Big Exhale:  China and the US Ease Trade Tensions

The Big Exhale: China and the US Ease Trade Tensions

Politics has become even more unpredictable and so no one is entirely certain about the outcome the G20 Summit - especially concening US-China trade relations.

However there were sparks of a possible easing - a truce (at least temporarily) - of the highly publicized, and until recently, escalating, tensions between the two nations.

A 90-Day Truce

The US will hold off on raising tariffs (from 10% to 25%) on $200 billion worth of Chinese imports.

China agreed to buying a 'very substantial' (but unspecified) amount of US goods.

The 90-day truce period will give both sides a window for negotiating a longer term agreement.

Key issues include: forced technology transfer (from US to China), intellectual property rights protection, non-tariff barriers, cyber-intrusion, services and agriculture.


Impact on Textile Supply Chain

It is unlikely that we will see tariffs on apparel imports to the US.

China's agreement to immediately start buying US agricultural products will enable mills to import US cotton.

Sourcing in China will remain stable.  This will have a ripple effect on sourcing in other Asian nations.


Now What?

China and the US have agreed to immediately start negotiations (which will continue during the 90-day truce).  Both sides realize that the trade war has caused losses for both nations. 

Early reports about the G20 Summit from the Chinese media state that "the US has positively addressed what China felt were unresolved issues by Washington." 

At the moment, it looks like both sides are actively searching for way out of this standoff - without losing face.

Tags

political risk, sourcing