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US – China Trade Talks – Making Progress?

US - China Trade Talks - Making Progress?

The White House has released comments that point to improvement in trade talks as the US trade negotiators are talking to the Chinese, the latest meetings in Washington DC. Just weeks after the White House reported that “candid and constructive” talks were taking place, rumors were making their way through markets suggesting that the President Donald Trump and Chinese Leader Xi would be meeting at a Summit in Florida at the Trump Winter Palace.

Currently the Trump tariffs on China fall in the range of 10% to 25% on products form handbags to railroad equipment, with $53 billion starting in January 2018, and an additional $200 billion enacted in September 2018. Finally there is a threat of another $267 billion of goods to be added – but while trade talks are now working, no action on these. 

However, China is said to be suspect of such meetings as Trump could, like his did with North Korean Leader Kim, just get up and walk out on his guest. The Kim Summit was just a test run for Trump using his advanced game theory skills – of course taught to him by someone else who is in fact his coach. 

Despite having ongoing discussions, the idea of not having a deadline will make things even more difficult, or force these negotiations to stall. We at Classiarius feel that they will stall and despite China promising to buy more goods, the core structural issues will now change – these negotiations are going no where. The structure of the Chinese economy will take a decade to change, assuming China wants to change. 

These talks will drag on and in the end, there will be no meaningful changes in the system. The US wants China to make promises and note the there are tariffs on 250 billion dollars of Chinese goods earmarked for the US, that is 44% of all exports. 

The US will offer reductions in tariffs for good behavior because China has a history of not keeping promises. This issue will continue to dog Trump and the next two Presidents of the US. It will likely not end in the near future. 

Team Classiarius 

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