Chinese President Xi Jinping sent a congratulatory letter to the Expo, urging the rapid development of big data and the need to build the Big Data Expo into an international event. Photo: Reuters

This year has finally seen equities markets react to US President Donald Trump’s trade threats, and limited action, after investors spent last year shrugging off what was seen as empty rhetoric. But every time Trump sends markets into a tailspin, realization eventually sets in that threats of hunkering down for an all-out trade war are Trump’s way of saying he wants a small consolation that he can use to tout his negotiating prowess.

That happened again this week, when Xi Jinping’s much anticipated speech at the Boao Forum for Asia unveiled what could be construed as concessions in the form of lowering tariffs for autos and other pledges.

US stock futures jumped overnight on the news, and the major benchmarks all gained on the day. As of 3 pm, the S&P 500 was up 1.77%, while the Dow Jones Industrial Average and Nasdaq were up 1.89% and 2.00%, respectively.

Trump has, indeed, been talking a lot about China’s car tariffs, and that, along with some promises on intellectual property might give him enough to say the US got more with the tariff showdown than it would have without it.

In the long run, however, it will not appease the China trade hawks in the White House, such as US Trade Representative Robert Lighthizer and economic advisor Peter Navarro, nor will it satisfy the portions of Trump’s political constituency that don’t grow soybeans.

To this end, exiled former White House chief strategist Steve Bannon told the New York Times on Monday that standing firm on tariffs will be the ultimate test of Trump’s beliefs.

“This is going to be a bumpy ride,” Bannon said. “I don’t think he’ll back off because of a couple of bad days in the stock market — and I do think he’ll have a couple of bad days.”

If Trump does accept a negotiated truce — framed by Beijing as one that was on their terms and in the context of China being the party more open to trade — it will not be the end of the story. Not only has Trump become the standard bearer for the Republican Party, in part, by saying he will confront China on trade, the Democrats who will be opposing him in 2020 agree. Senators Bernie Sanders and Elizabeth Warren, both possible challengers in the next presidential election, align closely with Trump on trade.

If there are no large structural changes made to the US-China trade relationship — which keeps important segments of American industry, such as software and cloud computing companies, effectively closed out of the Chinese market — when 2020 rolls around, candidates to be the next president won’t be asking whether to fight China on trade, but how. And if a Democrat dethrones Trump, they won’t have to worry about soybean farmers.