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The trade war between the US and China has lasted over a year, and the announcement that the nations had reached a phase one deal was good news. Investors have been looking forward to the details of the deal expected to be signed on Wednesday, but there isn’t much they expect that they don’t know.

Markets optimistic of the new deal

For weeks stocks had been kept afloat on the hopes of the deal. On Tuesday US market the Nasdaq, Dow, and S&P 500 were soaring before a news service headline that indicated there will be no rollback on tariffs. This rattled the markets sending the indexes into negative territory.

Although President Trump has been lauding the phase one deal, analysts warn that it is more of a temporary truce rather than a deal. They indicate that there is some volatility regarding the release of the trade deal as issues plaguing both parties have not been addressed. A deal light on details that does not address how to stop trade abuses could be negative. This is after reports emerged that tariffs could not be lifted.

According to a Blomberg report, the phase two deal will not come until after the November presidential election. The deal is expected to roll back some of the 15% tariffs on Chinese goods to 7.5% and stop any more tariffs.

Not all issues have been addressed in the deal

The deal will, however, enhance intellectual property protection, improve market access to the Chinese agricultural and financial services sector as well as deal with forced tech transfer. Interestingly an enforcement provision permits the US to re-impose tariffs on china if it welches on its commitments. On its side, the US commits to reduce or drop tariffs on Chinese products.

Nevertheless, the deal has not tackled other pertinent issues of the trade dispute, such as subsidies for state-owned corporations. And it appears that might not be tackled as each side doesn’t seem to yield its position. As a result, this makes the deal volatile, and the two sides could easily go back to new tariffs and trade tensions.