US and China Close to a Stop Gap Trade Deal

The Wall Street Journal is reporting that are exploring a trade deal in which Washington would hold off on further tariffs through the spring in exchange for new talks looking at big changes in Chinese economic policy, said officials from the USA and China.

It is possible this could be announced shortly after President Trump and President Xi meet on Saturday at the end of the G20 Summit.

Nextbigfuture believes there will be a temporary deal and a longer-term deal in 2019. The reason is that both Trump and Xi want there stock markets to recover and for their economies to have better performance in 2019 and 2020.

The US stock market has been going quite badly since just before the November election. Trump has political motivation to turn that around.

China markets and economy have been doing badly most of the year.

If there was not a long-term deal in place later in 2019 and through 2020 then the risk would be very high that the US economy would under-perform and possibly be in recession in 2020. Trump would want a good economy leading up to the 2020 election.

I do not believe Trump would prioritize different factors of US long-term interests over his re-election. Like getting 60-70% of what he wants versus 30-40%. A technically inferior deal would still get the green-light as he started looking at re-election late in 2019 and into 2020.

Trump is Still Maintaining Negotiation Pressure With His Remarks

“I think we’re very close to doing something with China but I don’t know that I want to do it,” Trump told reporters. “Because what we have right now is billions and billions of dollars coming into the United States in the form of tariffs or taxes, so I really don’t know.”

12 thoughts on “US and China Close to a Stop Gap Trade Deal”

  1. I suspect you’re right about China not settling for a deal that’s bad for them. I think a lot of people are horribly wrong that the U.S. “wants” or even “needs” a deal with China. If I had to bet, I’d be more inclined to bet on no deal.

  2. He can then jack them up to 25% across the board and that is before he goes after GATT. When he eliminates those agreements he can then jack up tariffs to a 31+% ad valorum rate under existing law (converts the 1934 tariff rates to ad valorum tariffs based upon 1934 prices). Which is stack able with the punitive tariffs.

  3. A 20.66 trillion GDP with 0.5 trillion in Chinese imports. US economy destroyed and in shambles…sounds like misinformed alarmism?

  4. Let’s be honest, wide and deep tariffs with China will hurt the consumer pocket book. Businesses will be hurt too and this will result in layoffs. These will result in a backlash against the trade war.

    Note, it may have been a big mistake to engage with China but it’s way too late to reverse this without destroying our economy and leaving the US in shambles for many years. If we want to leverage our nation away from this dependence we need to do so slowly and strategically.

  5. China has already placed tariffs on everything coming from the U.S.
    President Trump has another $400B to play with.
    China will lose this fight.

  6. I think no trade deal between the U.S. and China is far more likely than a trade deal in the long run. Chinese trade practices are simply incompatible with the U.S. system. In the next election cycle, any politician seen as friendly to offshoring production (and trade with China as a corollary) will be assured defeat. One issue both Republican and Democratic voters agree on at the moment is that outsourcing manufacturing jobs was a mistake.

  7. The big investors have never been unduly upset by the trade war. This is because the situation had gotten so out of hand that any deal at all, or even a president willing to address it, ineptly or perhaps not so ineptly, rather than just turn the other cheek, like all the career politicians have been doing for decades, is seen as a net positive.

  8. And I assume this will be used by Trumptards to “hey, you see we made a new deal with China” and we are the winners. I highly doubt China will settle for a bad deal for them

  9. Regarding Trump actually getting China to give into any of his demands, I think this is wishful thinking….

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