Economic Commentary – Week of 12.11.2018
U.S. – CHINA TRADE DEAL, ONE WEEK LATER
While the broad outline of a negotiating period was a positive takeaway from the trade agreement between Presidents Donald Trump and Xi Jinping at the G-20 summit, details remain elusive. Headlines following the meeting signaled a meaningful cooling of tensions as the Trump administration put a hold on further tariff increases during the negotiating period, and both sides raised their commitment to making progress on key issues. However, conflicting details contained in official statements and administration comments from both sides reminded markets of the potential challenges to finding common ground. Both sides continued to express optimism that a deal can be reached, and we remain optimistic as well; however, a number of tricky hurdles remain, and negotiations, even if successful, are likely to go through rough patches as both sides push for the best possible deal…. (cont’)
KEY TAKEAWAYS IN THIS WEEKS ISSUE
- Conflicting messages from government officials led investors to question initial trade-deal optimism.
- Progress is likely on some easier issues, but negotiations will be challenging around areas related to intellectual property.
- Expect headline volatility to persist over the next few months as both sides jockey for position.
- The 90-day negotiating period may turn out to be more of a progress report than a final deadline.