| The New York Times

Trump and China Have a ‘Phase One Deal.’ The World Economy Is Still at Risk.

In June, President Trump threatened to put new tariffs on Mexican imports to force the Mexican government to do more to curtail migration from Central America. The threat came after the conclusion of extended negotiations to rework Nafta into the United States-Mexico-Canada Agreement.

Even though those particular Mexican tariffs never went into effect, the message to businesses was that trade tension is a new normal — not a limited, tactical war with achievable goals, but a perpetual state of aggression that can become more or less intense at any particular time.

You can see that recognition in how businesses are behaving. The scale of the tariffs actually being collected thus far remains moderate relative to the scale of the United States economy. But there is plenty of evidence that this sense of trade chaos is hanging over business decision-making, especially in the export-focused manufacturing sector.

“Markets may respond, but that doesn’t mean that firms will,” said Emily Blanchard, a trade economist at Dartmouth’s Tuck School of Business. “It’s firms’ decisions that matter for the economy.”

Business investment spending subtracted from overall G.D.P. in the second quarter, and job creation by the factory sector has slowed enormously in 2019 — only 3,000 jobs a month, down from 22,000 in 2018. A report on September factory activity showed it in negative territory.

“It is difficult to take that much comfort from the latest signs of progress given that we’ve had plenty of apparent truces in recent months end abruptly in a sudden further escalation in trade tensions,” Michael Pearce, senior United States economist at Capital Economics, said in a note to clients.

He noted a twist: The agreement on currency policy that is a key part of the new deal was part of a previous truce that then fell apart during a period of re-escalation.

As that shows, in Trump-era trade policy, the risk of a major disruption to world commerce never really goes away. It just arrives in unpredictable waves — and Friday’s deal represents a low ebb.