U.S. President Donald Trump and China's President Xi Jinping meet business leaders at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj

SAN FRANCISCO (Reuters Breakingviews) - Donald Trump and Xi Jinping are going back to square minus-one. Under a so-called Phase One deal announced on Friday, the U.S. president will gradually roll back some tariffs while his Chinese counterpart pledged to buy more U.S. crops. It’s limited stability, but companies, their investors and their workers are worse off than when they started.

Major U.S. stock indices were up on Friday morning at the idea that an agreement was solidified after a series of setbacks. It would reduce tariffs on $120 billion in Chinese goods while other levies could be lifted later. Another round of tariffs that were set to take effect on Sunday would be canceled, while the People’s Republic would buy more agricultural products, along with energy and financial services.

Companies are still at a disadvantage relative to pre-trade war days. Though tariffs will be reduced, they are still in place and higher rates or additional levies could still be imposed if China doesn’t adhere to its pledges. Tensions could easily rise again, so it remains hard for businesses to make long-term decisions about where to source or manufacture products.

The more complicated issues are also unresolved. The detailed text of the initial pact has yet to be written while commitments from Beijing to protect intellectual property or open its financial sector will likely be vague. State subsidies for Chinese firms and forced technology transfers are being pushed down the road.

A limited pact was the best firms could hope for. It has taken much longer than negotiators expected to hammer out even a small deal, and the clock was ticking on the November 2020 U.S. presidential race. Even a shallow victory may give markets a brief boost and deflect some attention from impeachment proceedings.

Still, some damage can’t be easily undone. The International Monetary Fund estimated in October that the trade war could knock $700 billion off global GDP in 2020. Most of that came not from actual tariffs but from a loss of confidence and market ructions. This deal may contain those effects, but it does very little to reverse them.