NewsWire: The China-U.S. tug-of-war continues…
This past weekend, Commerce Secretary Wilbur Ross visited China to discuss trade negotiations with Chinese vice-premier Liu He. Mr. Liu reportedly offered a trade package, and proposed that China buy more U.S. farm and energy products to help shrink the trade deficit.
However, the White House has said it intends to move forward with tariffs shortly after June 15, and China has said there will be no agreements if the U.S. makes this move.
The U.S. reportedly estimates the value of these extra purchases to be worth $70 billion. Recall, the current trade deficit is $375 billion, and President Donald Trump has said he would like to see a $200 billion reduction.
The market read this as a non-starter, but the market needs to recall a quote from Trump’s book The Art of The Deal…
“My style of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.”
This is the back and forth of negotiations. The administration could be pushing for more concessions, having already achieved what they’re after.
Just last night, Reuters reported that Chinese communications-technology firm ZTE has signed an agreement that would lift the ban on purchasing goods from U.S. suppliers. And China has said it would look favorably upon the U.S. if it helped remedy the ZTE ban.
So could this be the beginning of the end for the China-U.S. trade war? Only time will tell. If the U.S. and China make progress and can work out a compromise it would remove a big overhang…
It could also be the catalyst for a market breakout.