But for businesses squeezed by the rising costs and deep uncertainty caused by tariffs, it’s a welcomed development nonetheless.
“Détente for three months,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote to clients on Monday. “We’ll take it.”
The US-China ceasefire “creates an off-ramp for de-escalation of the trade war,” Chris Krueger, analyst at Cowen Washington Research Group, wrote to clients on Monday. He said it recalls an adage in Washington: “When on the edge of a cliff, build more land.”
Outside of trade, Corporate America is already grappling with other challenges as the economic recovery from the Great Recession ages.
“Setting aside the imposition of tariffs is the right course of action for US workers, job creators and the economy,” Myron Brilliant, head of international affairs at the Chamber of Commerce, wrote in a statement on Sunday.
Tech, farmers hope for relief
Farmers will be a “very BIG and FAST beneficiary of our deal with China,” President Donald Trump tweeted on Monday.
However, the 25% tariff on soybean imports into China remains, for now at least.
Krueger expressed frustration with what he called Trump’s “arsonist firefighter trade approach” to agriculture.
“China will now purchase the rotting soybeans they would have bought earlier before the tariffs went into place,” he wrote.
Will a breakthrough happen in time?
“We are hopeful this will lead to both important reforms in China and a de-escalation in trade tensions between the US and China,” the Business Roundtable wrote in a statement on Sunday. The organization represents large US companies that employ nearly 15 million people.
But analysts are warning that such a breakthrough between Trump and Chinese President Xi Jinping will be very difficult to achieve under the limited negotiating window.
“90 days is not much time to tackle issues that have bedeviled Beijing and Washington for years,” Eurasia Group wrote in a report.
Goldman Sachs economists are similarly skeptical. The firm said that the chances of a comprehensive agreement has increased to about 20% over the next three months, but the most likely outcomes are for the truce to be extended when the deadline is reached or for an escalation in tariffs.
“It seems more likely (just over 50% probability) that the talks will falter when they reach more difficult issues,” Goldman Sachs chief US political economist Alec Phillips wrote to clients on Monday.
In other words, while the ceasefire is a significant step in the right direction, it’s far from a guarantee that the trade war is over. Until then, trade uncertainty will continue.