US-China trade talks
US-China trade talks are resuming today after the two sides held a round of talks in Beijing last week. To be sure, we’ve seen some progress in US-China trade talks, which is visible in the statements from both sides. There has been a lot of convergence on the agenda of the talks in the US and Chinese statements.
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According to the Financial Times, Myron Brilliant, executive vice president for international affairs at the US Chamber of Commerce, said, “We’re getting into the end-game stage.” He also said that “Ninety per cent of the deal is done.” However, Brilliant also added a note of caution saying, “the last 10 per cent is the hardest part, it’s the trickiest part and it will require trade-offs on both sides.”
How the trade deal would be implemented and enforced have apparently been the stumbling blocks in US-China trade talks. While China (TCEHY) (BIDU) would want the tariffs that US President Donald Trump imposed last year to be waived as part of the deal, last month Trump said that the tariffs could remain for a “substantial period.”
The US-China trade spat has hurt consumer as well as business sentiments. Businesses have been shying away from investments amid uncertainty over US-China trade relations. A trade deal that has a hanging sword in the form of tariff threats if China rescinds on its promises may do little to help boost business confidence.
While Chinese companies have been hurt by the country’s slowdown, US companies (QQQ) like Apple (AAPL), NVIDIA (NVDA), and Caterpillar (CAT) have also admitted that China’s slowdown is having an impact on their earnings. Falling car sales in China is also bad news for US automakers like Ford (F), General Motors (GM), and Tesla (TSLA).