- Businesses dependent on US-China trade have become fed up with the constant flow of mixed messages coming from the White House and its advisers
- China watchers suggest that little has changed despite steady stream of commentary, with December 15 tariffs not expected to be enforced
On Tuesday, after US President Donald Trump said a trade deal with China may not be completed until after the 2020 election, the Dow Jones Industrial Average suffered its biggest loss since early-October.
The following day, the same index gained 197 points, or 0.7 per cent, after Bloomberg News reported that a "phase one" deal " which would likely cancel additional US tariffs set for mid-December " was close to completion, despite a spike in bilateral tensions over Hong Kong and Xinjiang that had been tipped to scupper the agreement.
It was just another two days in the seemingly endless soap opera that is the US-China trade war, the playbook for which sees a procession of White House advisers " usually Larry Kudlow or Wilbur Ross " face the cameras each week to offer blow-by-blow updates on how close a deal is to being finished, juicing the markets in the process.
It has become exhausting for those accustomed to watching trade negotiations glacially unfold behind closed doors. But also for businesses dependent on trade between the world's two largest economies, who at this point would do anything for some certainty and are largely fed up with the updates from White House talking heads.
US companies in China are suffering from trade war fatigue. Fatigue from two years of negotiations with no resolution in sight, fatigue from the uncertainty, and fatigue from the blustering and threatsKer Gibbs
"US companies in China are suffering from trade war fatigue," said Ker Gibbs, the president of the American Chamber of Commerce in Shanghai. "Fatigue from two years of negotiations with no resolution in sight, fatigue from the uncertainty, and fatigue from the blustering and threats."
Frank Lavin, who headed the International Trade Administration for the United States Department of Commerce under former president George W. Bush, discouraged people from watching the drama unfold instantaneously, suggesting that the mixed messaging may not be "100 per cent helpful".
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"It is a mistake to try to follow this day by day, because you're always going to have conflicting signals," Lavin said. "There are a lot of moving pieces, I think it's like following the stock market day to day. Some people have to do it, but I'd say it's going to give you a lot of heartburn."
On the Chinese side, the messaging has been minimal, but consistent. At a press conference in Beijing on Thursday, Ministry of Commerce spokesman Gao Feng again said that if the two sides reach an interim trade deal, "tariffs should be reduced accordingly".
Beijing's lack of posturing is unsurprising, but those close to the Chinese government suggest that in reality, the needle has not moved much in recent weeks.
It is understood that neither side wants the December 15 tariffs to enter into force.
"I don't believe that the US will impose a new round of 15 per cent tariffs on Chinese imports. I am sure this won't happen," said Wei Jianguo, a former vice-minister in the Chinese Ministry of Commerce.
"The threat of adding new tariffs can only be seen as exerting pressure on Beijing. This cannot intimidate Beijing, as we would never run out of countermeasures to fight back."
From the US side, these tariffs are viewed as the last resort in a trade war gamed out by an algorithm built at the National Economic Council, which those close to the White House thought they would never have to unleash.
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The tariffs will bump up the prices of consumer goods such as iPhones, laptops and gaming consoles, a move the Trump administration will be keen to avoid in an election year.
Nor does China want additional duties on most of its remaining exports to the US. Sources on both sides have briefed that whether a deal is reached, these tariffs will be postponed.
This would be similar to the "goodwill gesture" that saw Washington postpone tariffs that were due to hit on October 1, China's National Day.
Others in Beijing read the Chinese government's relative silence as a sensible way of keeping the trade war from spiralling further out of control.
The reasons why Beijing is this calm is because Beijing doesn't want this trade war and won't escalate it, being calm is the only choice for ChinaLu Xiang
"The reasons why Beijing is this calm is because Beijing doesn't want this trade war and won't escalate it, being calm is the only choice for China," said Lu Xiang, a US affairs specialist at the Chinese Academy of Social Sciences, a government-linked think tank in Beijing.
"I am sure the trade war will further spill into other areas if the US imposes the new round of tariffs in mid-December."
Most observers do not expect the US and China to progress beyond "phase one", since the trickier elements of a deal " those that would require substantial changes to the Chinese economy " would be contained in a "phase two".
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But for traders left bone-weary by the constant back and forth, the most minor of deals would help buy some time, even if their long-term business prospects have been harmed for good.
"We are also concerned that the longer this drags on, the more difficult it will be to win back customers," said Gibbs. "Because the US is not working with like-minded partners, China has been moving to European and Japanese suppliers."
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