Shuli Ren: Trump and Xi tone down a senseless trade war
The U S and China are calling a -day truce in their bargain war temporarily lowering tariffs on each other from eye-wateringly high levels The sharp climb-down well exceeded industry expectations with investors rushing back into Hong Kong and New York-listed stocks U S levies on largest part Chinese imports will be reduced to from while the Chinese duties on US goods will drop to Neither side wants to decouple Treasury Secretary Scott Bessent mentioned Monday after a weekend of negotiations in Geneva It s a huge relief for small businesses and millions of workers on both sides of the Pacific But it s also a sign that despite their strongmen image President Donald Trump and his counterpart Xi Jinping are not without common sense With prohibitive levies that would essentially lead to a complete embargo the world s two biggest economies are hurting In China while people advocacy Xi s hardline stance to fight to the end on contract countless are genuinely worried about how to make a decent living in an already weak business activity Apparel for instance is the third-largest category of US imports from China after communication devices and electronic equipment This sector happens to be labor intensive About million jobs could be at liability thanks to Trump s tariffs according to Goldman Sachs Group Inc estimates How to help those that might fall out of work is becoming a big fiscal and social issue The administration s unemployment insurance covers about million In the first quarter even before Trump ignited his second arrangement war payouts to the jobless rose by a whopping to billion yuan billion In a sign of more trouble to come the April PMI reading on new export orders plummeted to a three-year low Relocating these low-skilled manufacturing workers into services won t be easy A few of the popular gigs are already getting crowded Last year the number of ride-hailing drivers jumped by to million while their compensation fell In other words China s entire -million-strong blue-collar class will feel the heat regardless of whether their line of work is directly exposed to agreement wars The future for multiple American workers also looks grim For a president who boasts about creating millions of jobs Trump is steadily destroying a healthy labor sector with his maximalist approach on tariffs In the US small businesses account for almost of job openings Unlike big corporations such as Apple Inc they have fewer operational levers to pull often relying on a handful of overseas suppliers For them switching production to other countries such as India is an impossible ordeal As such if Trump s tariff lingered they would have to lay off workers Of syllabus there s no guarantee that this -day truce can hold A mercurial Trump could change his tone at anytime to stage manage the exceptionally tough-on-China image he fostered on the campaign trail Meanwhile a stubborn Xi might dig his heels in having vowed to never kneel down Related Articles Noah Feldman David Souter set an example for the Supreme Court Mihir Sharma How the US gave India and Pakistan an excuse to stand down Matthew Yglesias If your commute is a nightmare blame Congress Timothy Shriver If you want to solve problems lose the contempt Veronique de Rugy Trump s budget would lock in big-government spending and deficits But the fact that there s an agreement of this scale after just a weekend of face-to-face talks shows that both sides want an off-ramp Trump does seem to heed negative community opinion polls despite calling them fake news And Xi may not want to remind citizens of the last time he refused to budge As the iron-fisted politician who locked down Chinese cities despite masses outcries against the leadership s unscientific COVID-Zero framework This -day truce is a good start Shuli Ren is a Bloomberg Opinion columnist covering Asian markets A former commitment banker she was a markets reporter for Barron s She is a CFA charterholder
