What in the world is going on with the trade negotiations between the U.S. and China?
Will the world’s two largest nations make a new trade deal or not?
What a week!
Traders on Wall Street are going to need to a stiff drink after the bell closes. They have had a roller coaster of a week. At one point it appeared that there was no hope for a trade deal — then it appeared a deal was on the horizon before it was announced that no deal would be made.
The negotiations have concluded for the week.
The drama began on Monday when President Trump tweeted that his administration would be placing 25% tariffs on $200 million of Chinese goods and adding tariffs to $350 billion on other goods.
Trump rattled the markets when he tweeted, “The United States has been losing, for many years, 600 to 800 billion a year on trade. With China we lose $500 billion. Sorry, we’re not going to be doing that anymore.”
The market dropped 470 points at one point, before recovering later upon word that a day was still possible.
It was reported that the negotiations hinged on one man: Chinese Vice Premier Liu.
The financial markets were on the lookout for any sightings of the Chinese Vice Premier. It was believed that if Liu landed in Washington, D.C., then a deal was likely.
According to Barclays economists, “All eyes will be on how China responds … an absence of Liu in Washington, D.C., would raise the likelihood of the 25% tariff hike being implemented by the U.S. this Friday, in our view, while it is also possible that President Xi may call President Trump directly, which could prevent the tariffs from being raised.”
Fast forward to Friday. It was announced that Trump was going to follow through on his threat and slap the tariffs on the Chinese goods. The market got jittery again.
That was short-lived. Trump assured the markets that the negotiations would continue and that he felt the discussions were productive.
The market recovered.
Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries. The relationship between President Xi and myself remains a very strong one, and conversations will continue. In the meantime, the United States has imposed Tariffs on China, which may or may not be improved depending on what happens with respect to future negotiations!
However, the drama continued.
At the end of the trading day, Treasury Secretary Steve Mnuchin said that there are no further trade talks planned between the U.S. and China “as of now.”
CNBC reported, “American and Chinese officials spent the day in negotiations that Mnuchin characterized as “constructive.” The next round of talks is expected to take place in Beijing, according to Chinese state media.”
The Dow recovered 450 points from its lows earlier in the day.
Tune in next week for more drama…