U.S. China Trade : Key Trends for 2020 | United States and China trade deal
The United States and China will sign a phase one trade deal and hold it together at least through November’s U.S. presidential election, allowing President Donald Trump to claim a victory for his trade strategy. The deal will reduce the risks that further rounds of tariff escalation would pose to the U.S. economy and stock markets. China will agree to buy more U.S. agricultural and energy products, reducing its purchases from Argentina, Brazil and Russia. It will also offer to implement some reforms on intellectual property and technology transfer laws. But China likely will not be able to meet its full commitments or the timetable for compliance, raising the risks that the White House could reintroduce some suspended tariffs. Even if that happens, Washington and Beijing will be able to prevent the preliminary deal from collapsing.
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U.S. and Chinese negotiators, meanwhile, will struggle to reach a comprehensive trade agreement that addresses China’s structural economic reforms, including its industrial policies and its support of state-owned enterprises.
The phase one deal will limit China’s economic slowdown. Beijing will rely on cautious monetary policy to support its economy amid a rising risk for defaults — as well as the social consequences that accompany its debt load.
U.S. China Trade
Nonetheless, the narrow deal will likely end the cycle of tariff hikes and truces that marked U.S.-China trade talks in 2018 and 2019, limiting the risks of significant escalation in 2020. This assessment delves further into the U.S.-China trade war.
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Source: Stratfor
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