Is the US-China trade war over?

For the past few weeks, from media reports to his never ending tweets, President Donald Trump claims that the US-China trade war has ended and that it would be of tremendous benefit not only to the US but to the world economy as well.

According to the White House, positive discussions are ongoing and there are proposals to remove the additional tariffs in phases as the two super powers wind down to sign an agreement. The tenor of President Trump’s statements and the demeanor accompanying it suggests that the US will again play its role as the global economic messiah. This lingering issue all started anyway with President Trump hurling accusations against China for unfair trade practices, poor quality goods, and numerous intellectual property violations.

Everyone seems to be interested in the top level talks among the world’s two largest economies. This is for a good reason. The trade war is hurting many countries as these rival giants face off to divide the economy into two, with trading allies choosing to side with one nation over the other. The imposition of huge tariffs on Chinese goods — from cellphones, laptops, equipment for industries like energy and consumer products to restrictions on the sale of computer microchips to telecom giants in Beijing have resulted in an escalation of economic hostilities between the two. In fact, the IMF opined that this trade war, together with other trade issues in other jurisdictions, will decrease global growth in 2019 to 3%, the slowest so far in a decade.

Trouble is when one of the two goes on the offensive, the other one is sure to retaliate with a vengeance. This may engender the creation of a future world order of inward-looking trading blocs which does not augur well for global economic growth. In fact, this occurrence may be a looming security concern when ideology gets mixed up with commerce and industry.

But this battle is not only about them. It is also about us and similarly situated emerging economies in Asia which are tangentially dependent on the free flow of trade, investments, skills, and people between these rivals and its dynamics with the other economic powers. Global trade confidence is slumping per World Bank forecasts and this may have an impact on our country.

The world has actually moved backwards towards a more protectionist and in fact, antagonistic, brand of nationalism. Regional cooperation has been challenged. Cross border free flow of goods and travel is gearing towards traversing restrictive rules. Brexit, for example, is a U-turn from the common market of the Western European league of advanced economies.

It is heartening to learn that our economic managers have included this matter in their agenda. The Department of Finance and the National Economic and Development Authority have sat down to tackle local policy measures to zero in on how the country can see this trade war not as a threat but as an opportunity.

One option proposed is to encourage manufacturers from China to relocate to the Philippines given the attractive investment packages, lower costs of operations, relatively cheap real estate, a very skilled talent pool and a reliable supply chain. And while much has been said about the negatives of Chinese-driven businesses sprouting left and right in the country, there is no denying that it fuels our engines of economic growth.

The strategic key is firm but reasonable regulation, fair enforcement of trade and industry rules, and, most importantly, taking care of our people in the process.

Observers are still skeptical on the alleged imminent positive conclusion of the US-China trade war. The wound inflicted on both sides is deep enough to sustain a natural paranoia among policy makers, businesses, and even ordinary but highly nationalistic citizens outside the economic war zone.

Ariel F. Nepomuceno is a management consultant on strategy and investment.