JIM WATSON | AFP | Getty Images
US President Donald Trump (L) looks up as he sits beside China’s President Xi Jinping (R) during a tour of the Forbidden City in Beijing on November 8, 2017.
U.S. President Donald Trump and Chinese President Xi Jinping’s tariff ceasefire agreement over the weekend in Argentina was “a mistake” that undermines the global trading system, an expert told CNBC on Tuesday.
The two world leaders agreed to put any escalations to their trade war on pause at the G-20 summit in Buenos Aires. The U.S. will leave tariffs on more than $200 billion worth of Chinese products at 10 percent, but will wait 90 days before raising those to a previously threatened 25 percent level as the two countries continue negotiations, according to the White House.
Markets initially cheered the ceasefire, but that optimism was short-lived. Several inconsistencies — in statements by Beijing and Washington, and within the White House — suggested that both sides would not be able to find a common ground within the 90-day period and reignited worries that the tariff fight could slow down the global economy.
For Adam Triggs, director of research for the Asian Bureau of Economic Research at Australian National University, there are more reasons to dislike the deal than just it’s tight time frame.
“The deal is a mistake because it undermines the global trading system, will divert trade from other countries and will not reduce the U.S. trade deficit anyway,” he told CNBC in a Tuesday email. “It’s also a mistake because there are genuine problems in the trading system which the G-20 should be addressing.”
That is, according to Triggs, a multinational group such as the G-20 should have been deployed to create a multilateral agreement on issues such as the need to remove barriers to trade in services.
“Trump’s constant focus on bilateral deals distracts the G-20 from these real issues,” he added. “These are issues that can only be solved multilaterally, not bilaterally.”
According to a statement from the White House, “China has agreed to start purchasing agricultural product from our farmers immediately.” For Triggs, that was evidence that Trump’s bilateral deal will hit other nations: “China is currently buying agricultural products etc. from other countries … If China is forced to buy more from the U.S. then history shows it will reduce how much it buys from these other countries.”