Crisis averted—for now. Last week President Donald Trump met for the first time with Chinese President Xi Jinping at his luxury Palm Beach estate Mar-a-Lago, where the two leaders discussed North Korea and trade, among other topics.

Several times before I’ve commented on the implications of a possible U.S.-China trade war in response to Trump’s repeated calls to raise tariffs on goods shipped in from the Asian giant. On the campaign trail, Trump threatened to name China a currency manipulator and even suggested that, were he to become president, he would serve Xi a “McDonald’s hamburger” instead of a big state dinner.

I’m happy to say that no Big Macs appeared to be on the menu last week. Nor were there any immediate signs of a disastrous trade war. In a much-needed win for Trump, the two leaders agreed on a 100-day assessment of the trade imbalance between the world’s two largest economies. In addition, Xi pledged to give the U.S. better market access to important Chinese industries such as financials and consumer staples. Specifically, he conceded to lift China’s ban on U.S. beef imports, in place since 2003.

Perhaps Trump is the master negotiator he’s always claimed to be.

As encouraging as this news is, it will likely take a while before significant improvement can be made in balancing trade between the two nations. In 2016, the U.S. trade deficit with China stood at a staggering $347 billion, down from $367 billion in 2015.

Gold Expected to Continue Benefiting from Low to Negative REal Rates
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China’s Importance as a Trading Partner Should Only Increase

My use of the word “crisis” above was not made lightly. China is currently America’s third-largest export market after Canada and Mexico, having bought $116 billion worth of U.S. merchandise in 2016. That’s up from $19 billion in 2001, an increase of 510 percent.

The U.S., in other words, really can’t afford a trade war with such an important trading partner.

On Tuesday, the president tweeted that China would get a “far better” deal with the U.S. “if they solve the North Korean problem.” But then, it’s the U.S. that’s seeking a better deal from the Chinese, not the other way around.

Among the most valuable U.S. exports to China are, in descending order, oilseeds and grains, aerospace products and parts, motor vehicles and electronic components such as semiconductors.