Is there about to be an outbreak of peace in what in 2017 and 2018 at least have hitherto been fractious international trade relations?
First there was the deal between the US and Mexico. Then there were enough hints from the EU’s chief negotiator on Brexit deal to boost sterling against all the major currencies. Then there were signs that Canada may follow Mexico into a new deal with the US, in effect solemnizing the NAFTA agreement anew in the new context of President Trump’s America.
On top of that US markets hit new highs, and that’s even allowing for the headwind of a strong dollar.
The major outlier to all this positivity remains China. The US and China are still at loggerheads over trade and tariffs, with no signs of any let up in sight.
To be sure, there is some pressure building internally both in China and in the US. Mr Trump has had to provide billions in subsidies for farmers to counter the effects of new Chinese tariffs on agricultural goods, while inside China, Mr Xi’s position as undisputed leader, while not exactly challenged, has been called into question.
This is a country, after all, where the Winnie the Pooh movies are routinely banned because of a perceived likeness Pooh has to Xi - the Chinese haven’t yet grown the thick skins of their Western counterparts when it comes to criticism, and that in turn is perhaps a sign of real fragility in their hold on power.
It’s a well-known, if unspoken, dictum in Chinese politics that the people will tolerate the Communist Party as long as the communists can deliver growth and prosperity. Since the days of Deng Xiao-Ping, the Party has an unequalled track record in creating wealth for its citizens. But Mr Trump’s tariff policies may represent the first real threat to that dynamic.
Trump’s aim though, at least at this stage, isn’t to destabilise China internally. His rhetoric on the whole matches up to his agenda, which economically at least, isn’t that different from Mr Xi’s - he’s all about ensuring that the US creates wealth for its own citizens ahead of anybody else.
Reasonable enough goals, if you follow the ideological path of Steve Bannon and those who espouse economic nationalism. Potentially less reasonable, though, if you are a liberal economist that espouses free trade as the global dogma that will drive progress.
But the two might not be mutually exclusive. Mr Trump has said on more than one occasion that he isn’t in favour of tariffs per se, and that he will use them only in circumstances where trade seems unfairly weighted against the US.
Financial analysts have been debating in recent weeks what this really means, given that Mr Trump’s idea of deficit reduction is hard to square with his tax cuts and his tariff wars. But actually this is probably the wrong discussion to be had.
Mr Trump can already point to victory in his tariff wars in the context of the Mexico deal. If Canada and the US come to terms, that will be a second tick in the box. And those deals will likely result in reductions in tariffs rather than increases.
But China remains the great unknown, the big bluff and the tariff struggle between the US and China remains the single biggest risk to an otherwise fairly robust picture of global growth.
Will China fold, and open up its markets to more competition? At some point China will have to accept on an economic level that it’s no longer a developing nation. As it stands, it’s not clear if we’ve reached that point. On the other hand, if Mr Trump’s tariffs do start to bite down on Chinese growth the pressure inside China to reach agreement will become acute.
After all, if the American people decide that ultimately they don’t like what Mr Trump is doing, they can always vote him out of office. In China, the equivalent path is fraught with much more drastic consequences.