The trade war is doing so much damage to the world economy that the United States and China might just roll back some of their destructive tariffs. That’s just what is needed to avoid a recession.
On Thursday, China revealed that the two sides are talking not only about avoiding an escalation scheduled for December, but removing some existing tariffs. If that becomes reality, it would be a strong step in the right direction, especially if those tariffs stay off.
For months, the trade drama focused on whether the clash would get worse, with ever more rounds of tariffs piling up on items like iPhones and video game consoles. Markets surged on every indication that an escalation could be averted, even when there were few concrete signs the tariffs might be reduced.
The trade war is the No. 1 risk to the economy, both in the United States and around the world. American factories, slammed by weak global growth and trade tensions, have suffered three straight months of contraction. Business spending is weak, shrinking in consecutive quarters.