Jubak’s Picks: USA-China Trade Deal Expectancy

Over the week-end, the South China Morning News reported that the proposed meeting between President Donald Trump and President Xi Jinping to sign an agreement ending the USA-China trade war may now be pushed back to June. That meeting had originally been scheduled for the end of March and then pushed back to April. The U.S.A. had earlier set a deadline of March 1 for an agreement–or the USA would raise tariffs on $250 billion of Chinese exports. The Trump administration extended that deadline, saying that good progress had been made on the agreement. There is nothing that would prevent the Trump administration from extending the deadline to accommodate a June meeting.

More worrying is the reason that the Hong Kong newspaper is reporting for the new delay. Apparently, the problem is a split among U.S. negotiators over whether to push for clear enforcement mechanisms in the agreement that would let the USA track China’s performance on its promises or to accept an agreement in principle on the enforcement issue. China hawks in the administration have said that they are willing to kill the deal unless it has real enforcement teeth in the agreement. Chinese negotiators have balked at allowing the USA expanded insight into the inner workings of the Chinese economy or the unilateral power to decide if the agreement has been violated.

The timing of a Trump-Xi meeting is speculative right now. Trump and Xi are both expected to attend a G-20 economic summit in Osaka, Japan, in late June.

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About Bob Weir 3242 Articles
Bob Weir has over 50 years of investment research and analytical experience in both the equity and fixed-income sectors, and in the commercial real estate industry. He joined eResearch in 2004 and was its President, CEO, and Managing Director, Research Services until December 2018. Prior to joining eResearch, Bob was at Dominion Bond Rating Service (DBRS).