U.S. may want to keep its preliminary trade deal with China

Market Trends - 04/06/2020

On Friday a Morgan Stanley economist stated that the United States will probably not fancy a “break” of their preliminary agreement (phase one trade deal) with China, despite the fact that lately the tensions between the two nations have increased.

The President of the United stated Donald Trump, announced in May that he felt “very torn” about whether to terminate the phase one deal or not. His comments increased anxieties among investors, that the two super economies would renew a tax dispute that’s slandering to the world economy. The chief economist and global head of economics at Morgan Stanley’s, Chetan Ahya, said to CNBC’s “At this point, our view from an economics standpoint ... is as long as we have the phase one deal going on and there is no renewed escalation in terms of tariffs, then the global growth projections that we have should be intact”.

He emphasized the fact that the Trump government “would be focused on the economy right now and will not want to break the phase one deal,” so the risk of a renewed U.S.-China trade war hitting the global economy “is not likely to be happening in our forecast.”

The President has not modernized his position approaching the trade agreement, which was approved in January and stopped the damaging tariff dispute with China that continued for more than a year.

However, Robert Lighthizer, a U.S. Trade Representative said Thursday that he felt “very good” regarding the agreement and that “China has done a beautiful job” with some fundamental changes.

China last week reiterated that it will maintain good relations and continue implementing the phase one trade contract. Many experts still believe that China will fail to match the conditions to significantly expand its purchase of U.S. goods and services.

China has previously failed to fulfill its commitments due to the coronavirus outbreak.

The above content is considered to be market commentary information and shall not be perceived as independent investment research or investment advice.

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