When Donald Trump and Xi Jinping met for talks in Argentina after the recent Group of 20 leaders' summit there, the U.S. president told his Chinese counterpart that he would hold off -- for now, at least -- on imposing another round of stiff tariffs on Chinese imports. The two leaders also agreed to continue holding bilateral talks to prevent the trade war from deepening.
That both presidents showed restraint and a desire to halt the cycle of sanctions and retaliation is a welcome development, indeed. However, given that they essentially only put off finding solutions to such pressing issues as China's violations of intellectual property rights and Beijing's practice of forcing foreign companies to transfer their technology when setting up local units, it is hard to say that the latest talks have done much to ease global anxiety.
The Trump administration has implemented three rounds of punitive tariffs for reasons of protecting intellectual property, imposing hefty import duties on $250 billion worth of Chinese goods. It had planned to raise the tariff rate from 10% to 25% on $200 billion worth of that total from January 2019.
But the Trump administration has chosen to postpone that increase for the moment and instead continue discussions on how Beijing plans to address such matters as intellectual property theft, forced technology transfers and nontariff barriers. If the two sides fail to reach an agreement on these issues within 90 days, Washington intends to carry out the planned tariff hike.
Should the trade war intensify, not only would it stifle business recoveries in the U.S. and China, it would also destabilize the global economy and financial markets. It makes sense, then, that the leaders of the world's two largest economies looked squarely at this risk and moved to ease tensions.
Unfortunately, there is no cause for optimism about how the U.S.-China trade talks will play out. The standoff between the two countries is deep-rooted: China clearly wants to achieve economic and technological dominance, while the U.S. is determined not to let that happen. Resolving complex issues in which American and Chinese interests are at stake in just 90 days is an extremely difficult challenge -- and that is even if Washington chooses not to press Beijing over its "Made in China 2025" program aimed at fostering high-tech industries.
Nevertheless, the two countries should tenaciously strive to find common ground for a compromise. As it stands, simply prolonging the trade row will take a heavy toll on the global economy and financial markets. And neither side will be doing themselves any favors by deepening sanctions or taking retaliatory measures.
If the trade war causes U.S.-China relations to sour even further, tensions that already exist between them over Taiwan and China's military rise in Asian waters could heighten. Already, their standoff has rendered the Asia-Pacific Economic Cooperation forum and the G-20 dysfunctional, creating a global leadership vacuum.
What needs to happen first is for the Trump administration to stop its provocative attitude. It should immediately withdraw its unilateral sanctions, which violate international rules, and seek to redress trade imbalances through sincere dialogue with its trading partners.
China, meanwhile, cannot continue its malicious intellectual property violations and forced technology transfers. Instead of reflexively resorting to retaliatory measures, we would like to see China cooperate on addressing trade imbalances with the U.S. by giving foreign companies and investors greater access to its markets.