The appearance of a U.S.-China trade war “ceasefire” this weekend was a very good sign for the near-term future at least, and the markets are responding accordingly. Futures point to a pop of roughly 2-2.5% on Wall Street, in line with the rises seen today on the Hang Seng and Shanghai Composite indices, and in Europe too.
However, while President Donald Trump has been talking up the truce brokered at the G20 summit as “an incredible deal” and potentially “one of the largest deals ever made,” there is every reason to look closely at the fine print—or the lack thereof.
Here’s what we do know: if both sides keep to their word, there won’t be any new tariffs being lobbed around in the next few months. But let’s examine the specifics:
- Trump tweeted: “China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.” The last sentence is certainly true, but as for the first, there’s no mention of such an agreement in the statements issued by the White House and the Chinese Foreign Ministry.
- Trump said: “What I’d be doing is holding back on tariffs. China will be opening up. China will be getting rid of tariffs.” The White House’s official statement says nothing of the sort; it only says the U.S. will hold negotiations with China on the latter’s “forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.” The Chinese Foreign Ministry says Trump and President Xi “reached consensus not to impose new additional tariffs and agreed to instruct the economic teams of the two sides to step up negotiations toward the removal of all additional tariffs”—closer to Trump’s claim, but nowhere near as certain.
- Per the White House: “China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately.” This goes unmentioned in the Chinese Foreign Ministry statement.
- What is mentioned by both sides is China’s agreement to more strongly control the trade in the opioid Fentanyl. White House: “President Xi, in a wonderful humanitarian gesture, has agreed to designate Fentanyl as a controlled substance, meaning that people selling Fentanyl to the United States will be subject to China’s maximum penalty under the law.” That means the death penalty, by the way, but anyhow, here’s what China’s Foreign Ministry said, again more vaguely: “China has decided to list all the fentanyl-like substances as controlled substances and start working to adjust related regulations.”
- Per China, “Trump said the U.S. side welcomes Chinese students to study in his country.” This would suggest the failure of more hawkish advisors, such as Stephen Miller and Peter Navarro, to convince the president to keep Chinese students out of the U.S.
Some vagueness is to be expected in a temporary, in-principle agreement such as that struck this weekend. Trump, meanwhile, paints himself as a master deal-maker, so it is also to be expected that he would try to portray the truce as more historic than it actually is. We saw how that panned out with the North Korean denuclearization talks, where Trump appeared to believe he’d walked away with more than he actually got, so there’s reason to be skeptical until more details appear.
But here’s what is particularly concerning: many of the issues around which negotiations will now revolve—above all the theft-by-hacking of intellectual property—are issues where China denies being at fault, and where a meaningful resolution would involve China proving that it has changed its practices. On top of that, as Hudson Institute senior fellow John Lee wrote for CNN, backing down on protectionism, IP theft and forced technology transfers could well force Xi to scale down his ambitions for Chinese economic development.
So let’s celebrate for now, while recognizing that the trade war could easily still escalate a couple months into 2019.
This story originally appeared in Fortune’s CEO Daily newsletter. Subscribe here.