The trade war with China has been a two-steps forward, three-steps back affair. The current thinking is in the “two-steps forward” camp. The president told reporters Monday his negotiators are moving ahead on a so-called Phase One trade agreement: “We’re looking probably to be ahead of schedule to sign a very big portion of the China deal.” The president teased a meeting with Chinese President Xi Jinping at the APEC summit in Chile next month and said progress was “a little bit ahead of schedule, maybe a lot ahead of schedule.” The contours of this first phase include purchases of US agriculture, promises on intellectual property rights and in-roads for US financial firms in China. “It will also take care of a lot of the banking needs,” the president told reporters. It’s a dose of optimism in a trade war that has dragged on for a year and a half. On Friday, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He by phone, according to a statement from the US Trade Representative’s Office, and made “headway.” Earlier this month, Beijing said it would buy $40 to $50 billion in US farm goods and the US dropped a planned October 15 tariff increase. The trade progress — and hope for an interest rate cut this week from the Federal Reserve —has propelled the Standard and Poor’s 500 to a fresh record high this week. So what could go wrong? For starters, investors have been fooled before. Tariffs threatened, then delayed. The Chinese backtracking. Talks crumbling. New tariffs. The president’s trade adviser Peter Navarro tells me there is always the chance of Chinese miscalculation. “The Chinese have consistently miscalculated going back to Mar a Lago, they misread the signal of resolve and strength by the president. And as a result they’ve slow walked us and reneged on deals and all they’ve gotten is a tougher and tougher stance.” Navarro is a proponent of a fundamental course correction in how the US does business with China. What’s on the table today, though, is a mini-deal, to keep the parties talking, with the hopes of another deal later. Thornier issues are left unresolved. Still, the US has plenty of leverage to keep the Chinese negotiating for this mini-deal and beyond. The administration is still planning a new 15% tariff on Chinese-made laptops, smartphones, footwear and clothing 10 days before Christmas. And none of the other taxes piled on since the start of the trade war have been dropped. That pressure remains.