The Art of the Deal
The G-20 is upon us. Crunch time for world leaders, show time for the media, and squeaky bum time for investors. Touch wood, the US and China can hash out a new trade deal that ends the tariff slapping contest of late.
The trade war has been a race to the bottom from the start. It began when Donald Trump promised to strengthen business at home, forcing out Chinese competition so that American businesses could supply American businesses. Trump built his wall of tariffs in front of China; 25% taxes on 250 out of 350 billion dollars’ worth of goods. Huge! And President Xi of China was having none of it. He retaliated, and while number crunching companies in both nations are finding it wiser to buy local, that severs trade ties and disrupts supply chains. Negotiations are deadlocked, both leaders tail spinning towards the unknown.
Sunday’s face-to-face powwow can’t come soon enough for investors. In the US, market-boosting interest rate cuts were recently pulled back by the Federal Reserve, making good news out of Japan a must!
“We’re about 90% of the way there,” insists the US Treasury Secretary, Steven Mnunchin. But what about the final 10%? It’s touch and go whether Trump can be tempted into Xi’s “balanced” deal, as he chases “double or triple” China’s $1.2 trillion promise to buy American. He’s also in no rush to lift Huawei’s ban after a series of national security scares. This could become a stand-off, with any agreement being reluctantly signed. With the market on a tightrope and the world watching, keep Twitter tabbed!