The New Trade Deal With China Could Be the Calm Before the Storm

The stock market has been breathing a sigh of relief over Wednesday’s “phase one” trade deal with China. They should take another breath, though, as this is simply a truce in a battle that will likely resume after November’s election.

Both countries had ample reason to call a temporary halt to their struggle. Chinese growth has slowed significantly, to its lowest point in nearly 30 years. Automobile sales dropped by more than 8 percent last year, and that was on top of a 3 percent decline in 2018. President Trump’s threat to impose even more tariffs on Chinese imports in mid-December forecast even further problems for the export-dependent Chinese economy if they took place.