Goldman Sachs economists think the U.S. is at peak tariffs on China.

“We believe that tariffs on imports from China have likely peaked,” wrote the bank’s chief U.S. political economist, Alec Phillips, in a note to clients.

The analysts no longer believe tariffs will rise from current levels. “Instead, we expect that tariffs on imports from China will remain at current levels through 2020,” they wrote, referencing recent progress the U.S. and China have made on trade, including news that both sides have reached a Phase 1 deal.

Goldman also pointed to reports suggesting both sides have made progress on outlining the terms of a Phase 1 deal.

“If true, this lowers the risk of a breakdown in talks that would lead the White House to impose further tariffs,” the analysts wrote.

The markets have run with the recent bout of trade optimism, with the Dow Jones Industrial Average (^DJI) hitting a record high on Monday, eclipsing its prior record from mid-July 2019. Plus, a better-than-expected jobs report and gross domestic product report in recent days revealed continued economic strength, raising questions about whether the tariffs are having a measurable effect on the state of the economy.

Still, there is uncertainty over whether or not the Trump Administration will proceed with planned tariff increases scheduled for December 15th.

According to reports, China’s President Xi Jinping and President Trump were supposed to sign the Phase 1 deal at the APEC Summit in Chile in November, but that meeting was abruptly cancelled due to political tension in Chile.

While it’s unclear when both leaders would sign the Phase 1 deal, Goldman Sachs said a brief delay beyond November is probable.

“The cancellation of the APEC Summit is likely to put the upcoming meeting between Presidents Trump and Xi even closer to the next scheduled tariff increase on December 15,” the analysts wrote.

Should the Phase 1 deal get signed, Goldman expects the White House to cancel the tariffs increases set for December 15th.

Still, Goldman reiterates the risks surrounding trade tensions, even though progress has been made.

“While further tariff escalation is no longer our base case, we believe the risks continue to point clearly in this direction,” they wrote.

Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.

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