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.”