U.S.-China trade deal eases tensions — for now

By James Langton | January 16, 2020 | Last updated on January 16, 2020
1 min read

The signing of a trade deal between the U.S. and China should boost confidence and shore up global growth, but risks remain, says Fitch Ratings.

In a new report, the rating agency said that the so-called “phase one” trade deal bolsters Fitch’s view that the global economy will stabilize in 2020.

“A pause in the U.S.-China trade war avoids further direct disruption…from higher tariffs,” Fitch said, noting that it has boosted its forecast for global GDP growth in 2020 by 0.1 percentage point to 2.6%.

Yet, the recently signed deal doesn’t end the trade war, Fitch cautioned. U.S. tariffs on Chinese imports are still much higher than they were a couple of years ago, it noted.

The full impact of the U.S.-China agreement will depend on how it’s implemented, “including whether China can meet its commitment to dramatically increase imports from the U.S., as well as possible trade diversion effects on other exporting economies,” Fitch said.

Additionally, Fitch noted that future talks on a broader deal would cover contentious areas, such as structural economic reforms in China.

“The global economy will therefore still have to navigate significant risks and uncertainties in 2020 and beyond,” Fitch said.

James Langton headshot

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.