US-China trade negotiations should resume this week in the wake of the annual National People’s Congress, which ended last Friday. US President Donald Trump delayed the imposition of additional tariffs on China, which were originally due to begin on 1 March. However, it is not clear how long the delay will last, given his recent comments that he is in no hurry to complete a deal with China. Expectations of a meeting between Trump and Chinese President Xi Jinping at the end of this month have been scaled back, and the latest media reports suggest that such a meeting might take place in April, at the earliest. Recent media reports suggest that the two sides are in general agreement on many crucial issues, including the rebalancing of trade flows, foreign-exchange stability and protection of intellectual property, but the sticking point is the enforcement mechanism. Worryingly, Robert Lighthizer, the US Trade Representative, warned last week that trade-policy talks with China could fail. He added that the threat of higher tariffs should be maintained (tariffs are currently frozen at 10% on $200bn of Chinese goods but they could rise to 25%). The risk-on tone prevailing in financial markets suggests that markets have already priced-in a positive outcome. As such, they are vulnerable to negative developments. From a broader perspective, our view is that even if a trade deal is reached in the short term, it will be fragile and temporary. What’s more, we believe such a deal will not fix the underlying structural issues. The confrontation between the two countries – ultimately concerning tech dominance – will likely persist in the medium term, resulting in repeated escalations of trade tensions.