Senior economist at French investment bank Natixis, Xu Jianwei, said that the punishing tariffs have already done its damage and that markets still face uncertainties.
His comments came after China and the United States agreed to a deal to temporarily slash reciprocal tariffs that were imposed last month, as the world’s two largest economies seek to end a damaging tariff war.
The breakthrough followed two-day talks between senior officials from both countries which have temporarily brought the current US tariff rates on Chinese goods to 30 percent, and Chinese duties on US imports to 10 percent.
“This public agreement serves as a quick fix, as both countries need this deal to stabilise markets and reassure investors,” Xu said.
“However, the damage is already done, and the uncertainty investors have learnt from the past month will be sufficiently disruptive, even if tariffs are substantially lowered.”
Xu also thinks both countries are still preparing for the worst despite the outcome of the weekend talks.
“Global trade relations will not revert to their previous state. Major manufacturers will seize this chance to develop alternative supply chains, reducing dependence on any single market, particularly China or even Asia as a whole,” he said.
