Peter Navarro Photo: IC

While White House trade adviser Peter Navarro denied saying that the phase one trade deal was "over," his clarification is far from satisfying at all as the US-China economic and trade relations have much more to make up for.

"My comments have been taken wildly out of context. They had nothing at all to do with the Phase one trade deal, which continues in place," Navarro said in a statement, adding that his comments were made over the lack of trust toward the Chinese side due to the coronavirus issue. While clarifying the misunderstanding, the statement made no secret of Navarro's hostility toward China, which makes one wonder which version of his story is true.

Capital market participants have always known better than politicians that the phase one deal is in the interests of both China and the US, and the world economy as a whole would benefit if both sides could stick to the agreement. By contrast, the loss of such a trade deal would deliver a serious blow to economic prospects. This is why US stock futures quickly tumbled after Navarro's "over" comments in an interview with Fox News, with the Dow Jones futures plunging more than 400 points.

Despite the clarification, Navarro's irresponsible comments have already had an impact on financial markets and the deal itself. As a person close to the deal talks, Navarro has actually cast suspicion on the trade deal with his reckless and contradictory attitude. If anything, he needs to show more goodwill or positive signals to offset the negative impact, so as to prevent further losses in the market arising from such uncertainty.

Looking at the big picture, the phase one trade deal is not the only issue in the US-China economic and trade relationship that requires efforts to eliminate doubts and concerns. The US government needs to reflect on all the battlegrounds it has opened against China in recent months, including but not limited to its crackdown on Chinese high-tech companies like Huawei, the US threat of revoking Hong Kong's special trade status, and its spat over flight resumptions, among others. 

The negative impact and trouble it has caused in these areas are no less than the shocks of Navarro's remarks this time.

As a result, bilateral relations are on the brink of a new Cold War amid unprecedented tensions, bringing increasing uncertainties to the economic relationship. Only by reflecting on and making efforts to remedy the damage that has been caused to US-China relations on multiple fronts can bilateral economic and trade ties return to a normal track.