There was a sense of deja vu after President Donald Trump gave an upbeat assessment following the opening day of trade talks between the United States and China in Washington.

Hopes of an “interim deal” have increased along with a proposed ceasefire to the tit-for-tat tariffs after the opening exchanges between US Treasury Secretary Steve Mnuchin, Trade Representative Robert Lighthizer and China’s Vice-Premier Liu He.

“I will say I think it’s going really well,” Trump told the media without revealing details. “We had a very, very good negotiation with China. They’ll be speaking a little bit later, but they’re basically wrapping it up and we’re going to see them tomorrow right here.”

So “good,” in fact, that he has invited Liu, who is President Xi Jinping’s economic envoy, to the White House on Friday. They have, of course, met before back in May 2018. Those talks eventually collapsed.

But this time, expectations and the scope of an agreement have been carefully managed.

Ceasefire

As Asia Times reported last month, an “interim deal” looked like the only offer on the table after Xi’s administration started to pursue a fairly narrow agenda.

Now, it appears, Beijing and Washington are working to craft a ceasefire that would stave off higher tariffs on $250 billion of Chinese imports on October 15 and $150 billion in December.

“We all know the next round of tariffs is going to hurt the United States as much or more than China,” Wendy Cutler, the vice-president of the Asia Society Policy Institute, said.

“I think neither side will admit it but I think they’re both under pressure to find a way to forestall the next set of tariff increases,” she added. “Every month that these trade talks continue, there’s more and more friction in the relationship.”

Discussions from the opening day of round 13 of negotiations are reported to have revolved around additional US agricultural purchases by China, an understanding on currency issues, intellectual property and market access. Nearly all of those options had already been on the table earlier this year.

“I believe that there’s even the possibility of a currency agreement this week,” Myron Brilliant, the head of international affairs at the US Chamber of Commerce, told the media.

Crucial issues for Washington, such as Beijing’s state-run model, digital trade and forced technology transfer, would be addressed later if a limited deal can be signed off, according to the Financial Times.

‘Serious’

“The Chinese side has come with great sincerity and is willing to make serious exchanges with the US on issues of common concern such as trade balance, market access and investor protection, and promote positive progress in the consultations,” Liu told Xinhua, the official state-run news agency.

The talks are taking place against the backdrop of heightened diplomatic tension.

Earlier this week, Washington blacklisted 28 Chinese companies, including eight high-tech firms, after they were “implicated” in human rights abuses. The US also imposed additional visa restrictions for Chinese government officials.

Along with the blacklisted companies, they were accused of persecuting ethnic Muslims in China’s Xinjiang region. Naturally, the measures have outraged Beijing.

Amid this toxic atmosphere, it is open to debate whether the world’s two largest economies will eventually hammer out a broad-range agreement. But Wall Street and Asian markets have reacted positively to Thursday’s modest developments.

“The prospect of US-China trade truce that results in the suspension of further planned tariffs increases is rightly welcome news,” Rodrigo Catril, a currency strategist at the National Australia Bank, said.

“But as it is often the case, the devil will be in the detail,” he warned, adding that if the optimism is to last “a meaningful de-escalation in tensions is required.”