Published: Fri, December 07, 2018
Markets | By Erika Turner

'very strong signals' that China is ready for a trade deal

'very strong signals' that China is ready for a trade deal

Values in NY surged on Monday but sank on Tuesday amid doubts the suspension of tariff hikes agreed during talks between Donald Trump and his Chinese counterpart Xi Jinping at the weekend would lead to a concrete deal to end their trade war.

USA stocks fell sharply again Thursday, following steep drops on Asian and European markets, with investors anxious about the fate of trade negotiations between the United States and China, the world's two biggest economies.

The global economy was already showing signs of a slowdown when President Donald Trump reminded the world of his love of tariffs and sent a chill through financial markets.

Trump, meanwhile, last week signaled he is still itching to open up a third front in his global trade war, urging Congress to support what could be up to 25 percent tariffs on vehicles imported from other trade partners, such as Germany.

The White House statement listed what it claimed China had promised to do.

In his latest Twitter storm, Trump said that his team of negotiators was still "seeing whether or not a REAL deal with China is actually possible", adding that China is "supposed to" start buying more USA agricultural products "immediately".

The White House on Monday had to correct a statement by economic adviser Larry Kudlow, who incorrectly told reporters in a conference call that the 90-day negotiating period between the USA and China would begin on January 1 instead of December 1.

Trump has threatened to impose tariffs worth a further $US200 billion on Chinese imports unless China makes it easier for United States companies to do business there.

"I have no assurances" China will change, Kudlow said, speaking at an event hosted by the Wall Street Journal.

The mood has quickly soured, however, on skepticism that the two sides can reach a substantive deal on a host of highly divisive issues within the 90-day negotiating period. That's a narrow window in which to solve some of their thorniest differences. Instead, the two sides are to negotiate over US complaints about China's trade practices, notably that it has used predatory tactics to try to achieve supremacy in technology.

Beijing, however, has not yet confirmed what, if any, concessions it has made to the Trump administration.

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Steven Mnuchin, the Treasury secretary, said that China had agreed to buy US$1.2 trillion of American products, but he could not offer specifics.

What are the next steps in the talks?

Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company, told NBC on Tuesday: "The market is reassessing if anything tangible happened at the Trump-Xi dinner". The U.S. point man will be Trade Representative Robert Lighthizer.

Trump and White House aides have promoted the apparent U.S. And it has said nothing about a 90-day deadline for the talks.

Among the conflicting assertions that White House officials made was over whether China had actually agreed to drop its 40 percent tariffs on USA autos.

President Xi Jinping and his most senior officials, including the commerce minister and the country's two top diplomats, are in Portugal, and due back in China on Thursday. Just remember Xi's 2015 promise to then-President Barack Obama not to militarize the islands it created in the South China Sea.

In a Twitter thread, Trump said that negotiations would end 90 days from the date of his "wonderful and very warm dinner with President Xi in Argentina".

Beijing's decision to keep things vague, for now, may reflect a desire to avoid being seen as having capitulated under pressure - the sides have 90 days to reach a deal - or may be a hedge against Trump's unpredictability, analysts said.

In fact, European automakers have rapidly expanded their manufacturing base in the U.S.in recent years. -China relations "will remain contentious".

COUNTING THE COST: What's the endgame in the US-China trade war? If negotiations sputter, Trump has his finger on the trigger, as he made clear in a tweet Tuesday: "I am a Tariff Man".

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