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Event Description

The escalation of tit-for-tat tariffs between the United States and China is now in the danger zone. Surely, reason will ultimately prevail. At least that is the common refrain in the echo chamber, especially in light of the dark history of earlier trade wars.

While it is likely that a deal will be struck on or before the upcoming G20 Osaka summit in late June, I fear any such agreement is likely to be superficial and offer little or no fundamental resolution to the deep-rooted conflict between the world’s two great powers.

The deal is likely to be superficial because it will probably focus on the least consequential aspect of the dispute — the bilateral US–China trade imbalance. This is the lightning rod in the debate, the culprit behind what US President Donald Trump calls the ‘carnage’ of job losses and wage pressures.

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