• by Thom Forbes  @tforbes, December 3, 2018

The global stock market is exulting this morning following the 90-day trade-tariff ceasefire announced after U.S. President Donald Trump and China President Xi Jinping dined together in Buenos Aires after the Group of 20 summit wrapped up on Saturday evening.

So, too, are automakers -- whose shares are soaring after Trump tweeted the following at 11 p.m. last night: “China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.”

The U.S. agreed to postpone raising the tariff on $200 billion of Chinese imports from 10% to 25% while negotiations continue. The tariffs were scheduled to take effect on Jan. 1. 

"In return, China agreed to purchase a 'very substantial' amount of U.S. goods including farm, energy and industrial products. This would help narrow the large trade gap between the two countries," report the Guardian’s Julia Kollewe and Martin Farrer.

“The outcome of the two-and-a-half-hour dinner meeting … following months of escalating tensions on trade and other issues, boosted financial markets around the world. The FTSE 100 index in London rose more than 2%, while Germany’s Dax jumped 2.6%, France’s CAC gained 2%, Spain’s Ibex rose 1.8% and Italy’s FTSE MiB gained 1.9%,” Kollewe and Farrer add.

"Futures on the Dow Jones Industrial Average indicated an open of about 443 points as of 6:34 a.m. ET Monday," CNBC’s John Melloy reports.

That’s a huge, and rapid, turnaround from the headlines of just a few days ago that were suggesting a new “Cold War” could be in the offing. But nobody is saying that forging a formal peace treaty will be easy, or that the recent escalation in tensions hasn’t permanently altered some cozy arrangements for enterprises on both sides.

“Markets should be happy, in that the worst is postponed. But I don’t see the West ever going back to business as usual with China. Too many genies have been let out of bottles,” Fraser Howie, co-author of "Red Capitalism,"tells the Washington Post’s David J. Lynch in an email.

“Over the past quarter century, American manufacturers grew dependent upon low-wage Chinese workers to produce iPhones, clothing and industrial parts, often at the expense of factory employees in the industrial heartland. China, in turn, invested more than $140 billion in the U.S. since 2000, according to the Rhodium Group, further knitting together two economies that account for roughly 40% of global output,” Lynch writes. “But almost a year of heated U.S. rhetoric, escalating tariffs and tighter investment and export controls have shaken Chinese government officials and global business executives.”

In fact, there is already an apparent rift in perception over what the deal is all about. 

“The tough road to a more comprehensive trade deal could be seen in the disparity between the official statements released by the United States and China, with the two documents essentially disagreeing over what was agreed to by Mr. Trump and Mr. Xi,” report Keith Bradsher and Alan Rappeport for the New York Times.

“The United States emphasized the 90-day window it has set for trade talks, while China made no mention of it. And the White House, which has accused China of ‘stealing' technology from American companies, said that Mr. Xi had agreed to ‘negotiate immediately on forced technology transfer, intellectual property protection, non-tariff barriers and cyber theft.’ The statement from China said only that the two countries would ‘work together to reach a consensus on trade issues’ but did not mention intellectual property,” Bradsher and Rappeport add.

Getting back to earth, literally, “at least one win for Trump would be if China carries through on its promise to resume buying soybeans and other farm products right away. The $110 billion in retaliatory tariffs imposed by China have hurt U.S. farmers particularly hard,” Doug Palmer, Adam Behsudi and Andrew Restuccia write for Politico.

“As part of the deal reached Saturday night, China agreed to buy ‘a very substantial amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries,’ White House spokeswoman Sarah Huckabee Sanders said in a statement. ‘China has agreed to start purchasing agricultural product from our farmers immediately.’”

Keep in mind going forward that there are two warring schools schools of thought within the administration. This morning’s victors are free-traders represented by Treasury secretary Steven Mnuchin and chief economic adviser Larry Kudlow. But don’t discount the influence of “hard-liners like Peter Navarro, the director of the White House trade office, [who] argue that [Trump] should keep ramping up the pressure on China until it folds,” as Mark Landler, Glenn Thrush and Keith Bradsher observed for the New York Times last week.

Indeed, the only thing that’s predictable is more “dramatic headlines and heated twitter exchanges” down the road, as Maleeha Bengali, CEO of MB Commodities Capital, suggests for The Street. As the subhed to her story puts it: “This was not a suspension of the trade war, merely a suspension in the escalation of it.”