The US so far have pushed the narrative that both sides managed to see eye to eye in talks over the weekend. And that China has finally understood the US' position on fentanyl and will do something about that. In the meantime, Bessent has been harping on the supposed mechanism for both sides to continue discussions moving forward. And he made sure markets know that with such a mechanism, retaliatory tariffs of the kind we saw last month will be avoided.
China's commerce ministry dubbed the deal as an "important step" in resolving the differences between the two countries via dialogue and consultation. Adding that it lays the groundwork for further cooperation. Note, there's no mention of fentanyl talks whatsoever here.
"This shows that China's firm countermeasures and resolute stance have been very effective. The countermeasures have had a material impact on the US and the US administration have reduced tariffs to the base level i.e. 10% after the talks."
All this is not to say that there's two sides to the story though. At least this time around, the narratives from both sides are lining up much, much closer together than before.
For just choosing to sit down and talk, China has definitely gotten a major concession from Trump. So, it's arguably clear who blinked first in this scenario. But at this point, it doesn't really matter who did. Egos aside, the development is a positive for markets and the global economy.
But in the bigger picture, can this be followed up by more positive correspondence and eventually an actual trade deal down the road? Or is this going to be the new normal with the US seeking sectoral tariffs/decoupling from China? We'll see in time.
This article was written by Justin Low at www.forexlive.com. Read More Details
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