USA - There is not going to be a trade deal between the United States and China any time soon, and that is going to mean a tremendous amount of pain for the US economy. For months, hope that the US and China would soon reach a trade deal helped to elevate global financial markets, but now that hope has disappeared. In order for a trade deal to happen, the two sides have to talk, and at this point no negotiations are scheduled. And unless one side or the other decides that they are willing to move dramatically from their current positions, there really isn’t any reason to talk. In fact, the Chinese government is openly saying that it is in “no rush” to negotiate with the United States…
If Trump was willing to back way down and give the Chinese everything that they want, of course China would be more than happy to resume negotiations. But that isn’t going to happen. Instead, the Trump administration demonstrated their resolve by sailing a US Navy vessel into disputed waters in the South China Sea on Sunday. Every time we send a warship into the South China Sea, it drives China up a wall, and the Trump administration understands this very well. Such a move definitely “sends a message” to China, but it also makes a trade deal much less likely.
Trump is going to continue to stand strong because he can’t afford to look weak on China with an election coming up, and the Chinese are not going to throw in the towel when they may only have to wait 18 months for Trump to be out of the picture. So for now we have a trade war to deal with, and with each passing day it is going to become increasingly painful.