between the US and China.

At the beginning of August, Donald Trump

had escalated tensions once more by saying

he was ready to put 10 per cent tariffs on a further $300bn

of Chinese imports starting on September 1,

so which really raised the pressure on Beijing.

But this week he sort of abruptly

decided that he would only plough ahead with about half

of those tariffs.

And he would delay the rest until mid-December

in order to shield the US consumer

from higher prices during the Christmas shopping season.

Now, that was initially greeted with some relief in the markets

because it was seen as a sort of a a climbdown

by the US president.

But then it dawned on many investors

that the Chinese were unlikely to come together and craft

a deal any time soon and that some

of the damage to the global economy has already been done.

So the two sides were very close to a deal in May.

And then the talks broke up abruptly.

They were looking at a very sort of comprehensive trade

deal that spanned many sectors of the economy.

Now, the hopes of such a sweeping sort

of lasting peace on the trade front between the US and China

have dwindled significantly.

And I think the best many could hope

for is a sort of a standstill at some point.

It looks like the motivations to strike

a deal, particularly on the Chinese side, have subsided.

That China is digging in for a long fight,

potentially until after the 2020 presidential election

in the hope that possibly there could have a friendlier,

at least more predictable president in the White House.

And on the US side, there seems to be very little appetite

to back down significantly.

Trump, I think, still believes that sort of bashing China

is politically the right thing to do.

On the other hand, there are signs

that the markets are in trouble partly because of the trade

war.

And there are fears about a potential recession

on the horizon.

That could change the calculation

and make Trump more amenable to some sort of compromise.

But at the moment it's hard to see that coming any time soon.