Trump Says China Trade Deal Will Wait Until 2020 Election
President Donald Trump said the trade agreement with China may not have to wait until the US presidential elections in November 2020, depriving hopes of an early resolution of the dispute weighing on the global economy.
«I don’t have a deadline, no, ” Trump told reporters in London, where he is attending a meeting of NATO leaders. – In a way, I like the idea of waiting until the end of the elections under the agreement with China. But they want to close the deal now, and we’ll see if the deal is right or not; it must be correct».
European stocks tumbled as the Chinese yuan slumped to a five-week low in the foreign exchange market amid comments by Trump seeking to increase trade pressure on other countries. Dow futures shed more than 100 pips on Tuesday morning to turn negative as traders reacted to the increased likelihood of any trade being delayed.
Trump said Monday that he will punish Brazil and Argentina with trade tariffs for «massive devaluation of their currencies».
The United States threatens with duties of up to 100% on French goods, from champagne to handbags, due to a digital services tax that Washington says harms American tech companies.
Investors hope the United States and China can defuse trade tensions that are testing the strength of the link between the world‘s largest and second largest economies since 2017, Trump’s first year.
«Every step back and every step forward is only part of a slow trend towards increasing barriers to international trade, ”said Jonathan Bell, chief investment officer at Stanhope Capital. – The market this year is optimistic about the likelihood of a successful outcome of trade negotiations. We are worried that the market may become volatile again next year».
But Sima Shah, chief strategist at Global Global Investors, believes Trump cannot afford a repeat of the stock market plunge in late 2018, when he raised the degree of trading confrontation..
«The Chinese government believes President Trump is desperate to strike a deal before the end of the year, when the race for the presidential election really flares up, Shah said. Trump’s latest comments are a ploy to reclaim positions in these negotiations».
Washington and Beijing have yet to sign the so-called «first phase» trade deal announced in October that raised hopes for a de-escalation.
Trump and Chinese President Xi Jinping had planned to meet and sign a preliminary trade deal at the Asia-Pacific summit in Chile in mid-November, but the summit was canceled due to anti-government protests in Santiago.
Trump, who said in September he didn’t need a deal before the 2020 election, tried to pressure Beijing on Tuesday.
«A trade deal with China depends on one thing – whether I want to do it, because we are doing very well with China now, and we can achieve even more success with one move of the handle, ”he said. “And China is paying for it, and China is by far the worst year they have had in 57 years. So let’s see what happens».
China reported its slowest economic growth in 27 years in October when trade tensions with the US hit its manufacturing sector.
Trump said Monday ahead of his trip to London that U.S. legislation supporting protesters in Hong Kong does not facilitate trade negotiations with China, but he believes Beijing still wants to strike a deal with the United States..
US Commerce Secretary Wilbur Ross said that on December 15, when an additional 15% duty on Chinese imports worth about $ 156 billion comes into effect, this is the natural date for an agreement..
Meanwhile, the U.S. economy grew 2.1% in the third quarter, according to a second Commerce Department estimate, up from 3.1% growth in the first quarter of the year..