US-China phase one deal brings some relief, but uncertainty remains

US-China phase one deal brings some relief, but uncertainty remains

A partial trade deal signed by the U.S. and China gives some relief to the market but doesn’t remove uncertainty, analysts said.

“There’s a great sense of welcome that the deal was signed and a little bit of relief, naturally, and some measured optimism about how we can move forward,” said Gregory Gilligan, chairman of the American Chamber of Commerce in China.

The world’s two largest economies signed the “phase one” trade agreement Wednesday afternoon at the White House, sealing a truce after slapping tariffs on billions of dollars worth of each other’s goods for almost two years.

As part of the deal, China also agreed to purchase an additional $200 billion in U.S. goods over the next two years.

Although tariffs are still being levied on $370 billion worth of imported Chinese goods, how effectively the deal works will help toward the making of a “phase two” deal, Gilligan told CNBC.

AmCham China members have already factored in the uncertainty and are cautious about their investment plans for 2020, Gilligan added.

As for the additional $200 billion of U.S. goods that China has promised to purchase, Gilligan said “hitting those targets will be difficult, but that’s good problem to have. We’d rather have a hard time selling stuff than no opportunity to sell stuff.”

It will also be a chance to “restore some trust in a relationship that’s a bit fatigued,” he added.

Gilligan said AmCham China will act as a bridge to help members who encounter issues by reporting them to both the U.S. and Chinese governments.

But others see the glass as being half empty.

“The expectation was some deal would get done, but it would still leave us with a lot of uncertainty, which I think we still have,” said Tim Seymour, chief investment officer at Seymour Asset Management.

Despite the commitment of additional Chinese purchases and other provisions, Seymour told CNBC, it was an “agreement where China got largely what they wanted. I think it was an agreement that was politically important on the U.S. side, and I think we still have a whole lot of uncertainty.”

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