Following last week's meeting between US President Donald Trump and Chinese President Xi Jinping, the US and China have agreed to cut tariffs on roughly US$30 billion (C$42 billion) of goods each, offering a rare sign of de-escalation in a trade relationship that has weighed on the global economy. The world’s two largest economies still have a long way to go to bridge their fractured relationship but this may be the first step in improving their trade and security relationship.

The list covers 1,619 categories of US exports to China, including farm products, coal and medical equipment, and 77 categories of Chinese goods headed to the US, such as toys, small appliances and glassware. China says about 90% of covered goods will see tariffs cut to most-favoured-nation rates.
The deal doesn't undo the broader tariff regime, but it signals both sides want to manage tensions rather than keep escalating, which could ease some pressure on global trade flows, business costs and
inflation.
Investors have generally welcomed the news as a reduction in trade-policy uncertainty, one of the biggest overhangs on global economic growth and earnings this year.
While Washington and Beijing ease tensions, Canada's own trade dispute with the US remains unresolved.
Less trade uncertainty could add to China’s industrial strength. China reported yesterday that industrial profits rose 15.7% year-over-year for the January-to-August period, mainly due to artificial intelligence and technology manufacturing.

The US-China tariff cuts are a modest but welcome step for global trade sentiment. The negative impact from trade disruption between the world’s largest economies spills over to the rest of the global economy. For Canadians, the bigger story remains closer to home. Until Ottawa and Washington find their own path back to the negotiating table, Canada is watching this de-escalation from the sidelines.

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