We at Classiarius believe firmly that despite the talk produced by the main stream media, the are sometimes clueless, that there will be no trade deal in Round 1, Round 2, and even Round 10 in the trade talks as these issues are structural and will take a decade to fix. The US and China, both putting their best trade negotiators on the project will come to a disappointing decision.
Trump wants to stall to make it look like he is pressuring the Chinese, while the economy slows, while he is not ready to put 25 percent tariffs on a wide range of goods, let’s say up to 200 billion dollars worth, He knows that he could kick the Chinese economy over the edge and will have little chance of forcing Beijing to concessions.
Now the US is saying that it is in the “final stages” of a trade deal with China but we are skeptical. There is a possibility of the US forcing China to buy a massive amount of goods and services but that is not opening up for trade, it is very far from opening up trade in fact.
This is a cat and mouse game that the US and China are playing. China can make changes by passing laws that allow new foreign investments in equity, but in terms of changing the massive trade deficit, only a long-term strategy will work. US Trade Representative Robert Lighthizer has demanded more concessions out of China – we will find out more in April. But note, there will be 5 and 10 more meetings to change the structure of trade. This is a 10 year negotiation, at least.