White House Warns “Phase One” of the U.S.-China Trade Deal Could Slide into Next Year. Dow Jones Drops 250 Points

by James DiGeorgia | 11/20/2019 4:20 PM
White House Warns “Phase One” of the U.S.-China Trade Deal Could Slide into Next Year. Dow Jones Drops 250 Points

Beijing continues to presses for larger rollback of U.S. tariffs. Trump administration counters with bigger demands of its own. The risk of no-deal could include a 10%-15% Wall Street correction as the 2020 campaign season begins, and China purposely waiting for a Democratic Administration to negotiate with them.


By James DiGeorgia

U.S. President Donald Trump and Treasury Secretary Steven Mnuchin said in an October 11th news conference that a trade deal with China was very close and that an initial trade deal “Phase One” could be signed in five weeks. Now just five weeks later, the two largest economies in the world are nowhere near signing any trade deal. Both parties are indicating, according Reuters, that negotiations are becoming more complicated.

President Trump and his trade representatives are concerned that rolling back tariffs to get “Phase One” of a trade deal will fail to address core U.S. complaints about protecting U.S. intellectual property and technology transfer issues. They believe that if they sign a “Phase One” trade deal without addressing these key issues will be trumpeted as a failure by their political opponents.

Trump has threatened that if he and Chinese President Xi Jinping don’t sign a deal on December 15, 2019 $156 billion in new tariffs on Chinese goods will be put in effect, including holiday gift items like electronics and Christmas decorations. 

President Trump was quoted before a cabinet meeting as insisting that…

 “China is going to have to make a deal that I like…If we don’t make a deal with China; I’ll just raise the tariffs even higher,”

Christian Whiton, a senior fellow for strategy and trade at the Center for the National Interest, and a former Trump and George W. Bush administration adviser was quoted by Reuters as saying…

“If talks are really going well, that hike (scheduled for December 15, 2019) will be suspended … If not, the U.S. will implement them, and that will throw the game into next year.”

 The world’s financial markets could also be thrown upside down. I have been warning my subscribers to World Opportunity Investor that a failure to get even a “Phase One” trade deal could trigger a 10% even 15% correction in the major indexes here in the United States, China, and around the world. With the approaching election season approaching, there’s always the danger that Trump ramps up his trade tariffs and the Chinese decided to suspend their agricultural purchases to inflict as much pain as possible in the Midwest and agricultural states, believing they’ll get a better comprehensive deal with a new administration in Washington.

The reality, for now, is negotiations are complicated by conflicts within the White House itself.  Donald Trump has a nasty habit and history of vetoing any deal agreed to at the last minute on a whim.

Despite a Saturday call between U.S. Secretary of the Treasury Steve Mnuchin, Chief Trade Representative Lighthizer and China’s Vice Premier Liu He that was called “constructive” by Chinese state media Xinhua, observers saw both the recent increase in Chinese agricultural purchases and the resumption of the U.S. government issuing licenses for some companies to supply goods to Huawei Technologies Co Ltd HWT.UL, the world’s largest telecoms equipment maker who’s blacklisting by the administration has been another point of contention; as a positive sign. There however are serious doubters…

Hu Xijin, the editor of the state-backed Chinese tabloid Global Times, tweeted on Wednesday that he believes that…

 “Few Chinese believe that China and the U.S. can reach a deal soon,”

While the Global Times is not the official media outlet of the Chinese Communist Party - Hu has described his role here as giving voice to what Beijing officials wish they could say in public. Saying in his tweet …

“China wants a deal but is prepared for the worst-case scenario, a prolonged trade war.”

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