After months of tension that have caused economic disruption across the world, a one-year trade truce has been agreed between the United States and China.
Following their meeting at the APEC summit in South Korea on 30 October, presidents Donald Trump and Xi Jinping have come to an agreement.
This means a pause to further tariff increases and the suspension of new export restrictions for the next year.
The impact this will have on the global economy remains to be seen, but your business needs to start adjusting for this change to ensure you are ready for the future.
Is the China-US deal a resolution?
The deal is not strictly a resolution, given that it is currently only set to last for a year.
It is a positive step, though, as it means that China will defer its planned export controls on rare earth minerals, while the United States will withdraw a threatened 100 per cent tariff on Chinese goods.
The agreement is set to be reviewed annually, which should provide an opportunity for ongoing discussions that could bolster longer-term trade cooperations.
If nothing else, the deal manages to lower the tensions that have been steadily building over the last few years.
How does the deal affect the global economy?
While the USA and China are the primary beneficiaries of the deal, it will have an impact on the global economy as a whole.
Together, the USA and China account for more than two-fifths of global GDP and almost half of manufacturing output.
Given the vital role they play in the manufacturing of smartphones and other core pieces of technology, rare earths are vital to many industries and any disruption to the global supply chain is problematic.
Global growth is often shaped by the actions of the largest countries and the USA and China can shape trade flows, investment patterns and commodity prices worldwide with the expansiveness of their reach.
However, both nations will likely continue to use trade policy as leverage, which means the risk of renewed tension has not disappeared entirely.
What are the implications for UK businesses?
It is hoped that some UK businesses that import materials that were affected by the USA-China tariffs should see costs stabilise.
Meanwhile, exporters should find improved sentiment among trading partners in Asia and North America as businesses in those regions are able to relax slightly.
However, given the instability of the agreement, there is still a risk to global supply chains, so having a diverse range of options is still advisable.
Companies with complex sourcing structures would be wise to map alternative suppliers and review contingency plans so that any deterioration of relationships does not cause too much financial damage.
Our expert team are on hand to help you understand the state of the global economy so that you can adapt your business practices accordingly.
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