The trade war is still on. Consider this a fragile truce

You’re forgiven if you thought the trade war between the US and China ended Wednesday. The president, in front of a crowded room filled with business leaders and his favorite TV hosts, declared trade victory.

“Together, we are righting the wrongs of the past and delivering a future of economic justice and security for American workers, farmers and families,” the president said.

The Washington DC split screen was stark. While impeachment gripped Capitol Hill, the president was at the White House re-packaging a narrow trade agreement in an effort to keep his election promises.

Political economist Greg Valliere called the trade deal “a life preserver, right on schedule” for a president facing an impeachment trial and also a win for investors weary of trade war. “The uncertainty that plagued US small businesses and farmers will subside, as Trump will boast on the campaign trail for the next several months,” Valliere noted.

But this is not the trade deal that the president set out to forge two years ago. It’s not even the broad agreement that fell apart in May.

And while there are notable wins for the US on intellectual property protection and a promise on forced-technology transfers, the big pledge on agriculture essentially fixes the damage caused by the trade war itself.

Further, this deal leaves the biggest problems for later.

It doesn’t address cybersecurity or China’s massive scheme of industrial subsidies and state-owned enterprises. (The US is now working with Japan and the European Union to address Chinese subsidies through the World Trade Organization.)

Meanwhile, tariffs remain on $370 billion in Chinese-made goods – the vast majority of US imports. At the beginning of the trade war, importers and retailers absorbed as much of the tariff as they could. Many economists don’t think that can last and will end up raising prices for American consumers.

The remaining tariffs are meant to keep the Chinese at their word and work toward another deal.

“I will agree to take those tariffs off if we are able to do phase two,” the president said.

But there’s plenty of skepticism about a meaningful phase two deal happening anytime soon.

“Now that the ink has dried on the Phase One deal, it ought to be fully reflected in prices, and we doubt that a Phase Two agreement addressing the structural differences between the two countries will happen,” Oliver Jones from Capital Economics wrote in a note to clients.