Trump Thanks China For The Greatest Stalemate In History

For a deal not yet signed and whose details are totally lacking, Trump thanks China.

No Deal Yet

Despite the hype, there is no deal. Nothing is signed.

Pleased to Be Behind

Trump is very pleased to be behind where we supposedly were 10 months ago.

It was a great deal then and an even greater deal today.

China Wins

The Wall Street Journal reports China Emerges With Wins From U.S. Trade Truce

China is emerging with wins in this week’s trade talks, with the U.S. shelving new tariffs against Beijing while leaving many demands to be worked out later in return for an assurance of increased agriculture purchases.

The two countries took an initial step Friday to cement a trade agreement that had been derailed for months. President Trump said the U.S. would call off planned tariff increases on Chinese goods next week while Beijing would buy $40 billion to $50 billion worth of American agricultural products—which China hasn’t publicly confirmed.

“If you’re China, you’re pretty happy with the outcome,” Arthur R. Kroeber, founder of Beijing-based consultancy Gavekal Dragonomics, said of the latest trade talks. “China’s negotiation position has always been, the longer you can extend the talks the better.”

Tariff Escalation Risk From Partial Deal

Morgan Stanley warns Tariff Escalation Remains a ‘Meaningful Risk’ Despite Partial US-China Deal.

Morgan Stanley says President Donald Trump’s partial trade deal with China is an “uncertain” arrangement at best and there does not appear to be viable path to reduce existing tariffs at the moment. 

“There is not yet a viable path to existing tariffs declining, and tariff escalation remains a meaningful risk,” the bank said in a note. “Thus, we do not yet expect a meaningful rebound in corporate behavior that would drive global growth expectations higher.”

“Trump’s statement that ‘We are near the end of the trade war’ is not plausible to us,” Evercore wrote in a note. “We do not expect tariff cuts in 2020 – but are ready to be favorably surprised.

“And as long as such punitive tariffs remain, we would describe US-China economic relations as bad, not good.”

Goldman Sachs sees a 60% chance that the announced 15% tariffs will take effect, but expects a delay until early 2020 as opposed to the current deadline of Dec. 15. Evercore said it expects a delay and no additional tariff hikes in 2020.

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