US President Donald Trump
US President Donald Trump speaks during a meeting with US Governors at the White House in Washington, on February 25, 2019. Image Credit: REUTERS

American and Chinese business leaders remain wary after President Donald Trump’s decision to delay an increase in tariffs, saying it’s too early to cheer an end to the trade war as both countries still have a long way to go in resolving their differences.

The US will put on hold a plan to impose 25 per cent levies on Chinese goods next month following progress in negotiations, Trump said in a Twitter post. While that reduces the chances of an escalation of the conflict for now, companies are reserving judgement after nearly a year of tariffs, retaliations, threats and bluster.

“This president seems to always change his mind,” said Melissa Shu, an export manager of E.D. Opto Electrical Lighting Co., an auto-parts company in eastern China’s Jiangsu province. “Who knows if he’ll take back his decision when he wakes up the next day?”

Uncertainty remains

Companies making plans about their China operations said the announcement does little to clear away uncertainty.

“Anything could happen in the next 60 to 90 to 100 days, depending on the discussions,” said Michael Crotty, founder and president of MKT & Associates Ltd., a Shanghai-based trading company that sells textiles and accessories carried by retailers such as Walmart Inc. and Target Corp. “We just don’t know.”

Businesses and their advocates have been left wondering about the US’s intentions. In an Oval Office meeting in front of reporters, Trump clashed with his US. Trade Representative, Robert Lighthizer, over whether to call any agreement a “memorandum of understanding.”

The terminology isn’t important, according to Jacob Parker, vice-president of China operations with the US China Business Council.

“From the business community’s perspective, it doesn’t matter if it’s called an MOU, if it’s called a trade agreement, if it’s called Sunday brunch,” he said in a Bloomberg Television interview. “What the US business community wants to see happen is see the tariffs removed.”

Contentious Issues

To get to that point, the US and China need to hammer out an agreement over contentious issues, including how to measure Beijing’s compliance with any deal, according to the American Chamber of Commerce in Shanghai.

“The absence of detail on what has been agreed so far means that our member companies have little idea if the agreement will bring material benefits,” Ker Gibbs, president of AmCham Shanghai, said in an emailed statement.

The business group wants any deal to include provisions on enforcement of intellectual property rights, as well as address subsidies for Chinese companies and restrictions on market access.

Even businesses that welcomed the tariff delay are proceeding cautiously.

“It’s great news,” said entrepreneur Ben Chu, who runs contract negotiation lessons online for Chinese factory owners and exporters to give them a leg up with American buyers. But he added, “The market still doesn’t trust Trump’s words.”