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Trump Seems Ready to Take China Deal Down to the Wire


May. 8 2019, Updated 12:43 p.m. ET

US-China trade deal

This week so far, key global stock indexes have seen a massive sell-off. On May 5, President Donald Trump’s tweet suggesting an escalation in trade tensions between the United States and China hurt investors’ sentiments. Investors had been hoping for a positive outcome from ongoing US-China trade negotiations, which are expected to be in the final stage.

At the close of trading yesterday, the S&P 500 Index, the NASDAQ Composite Index, and the Dow Jones Industrial Average had fallen 2.1%, 2.5%, and 2.2%, respectively, in the week so far.

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Trump on China trade deal

According to a recent Reuters report, China sent a 150-page draft trade agreement to the United States on the evening of May 3. The report suggested that the draft “was riddled with reversals by China that undermined core U.S. demands” that were discussed during the ongoing negotiation process between the two countries.

Earlier today, President Trump continued to criticize China on Twitter for backtracking in the negotiation process, revealing, “China has just informed us that they (Vice-Premier) are now coming to the U.S. to make a deal.”

However, he seemed to be ready to take a potential trade deal with China down to the wire. He added, “We’ll see, but I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers…great for U.S., not good for China!”

What to expect next?

President Trump is well known for being rigid when it comes to trade negotiations. If China doesn’t agree to his terms for a trade deal, he might not hesitate to further escalate the trade war between the world’s two largest economies.

Uncertainties about the US-China trade deal could keep investors worried for the next few days.

So far this week, the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust, Series 1 ETF (QQQ) have fallen ~2.1% and 2.5%, respectively. American tech giant Apple (AAPL) made up ~3.8% and 9.9% of SPY’s and QQQ’s portfolios, respectively, at the end of April 2019.


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