US and China 'closer and closer' to trade deal, talks set to continue
By Alexander Bueso
Date: Monday 08 Apr 2019
(Sharecast News) - Washington and Beijing are making progress in trade talks and negotiations are set to continue throughout the week, a top Trump administration official said at the weekend.
In remarks on broadcaster CBS's programme 'Face the Nation', on Sunday, White House economic adviser, Larry Kudlow, said the two countries were "closer and closer" to inking a deal.
Talks would continue over the next week with "a lot of teleconferencing", Kudlow said.
According to the director of the National Economic Council, the two sides had made progress on the subject of forced technology transfers.
Chinese state media appeared to corroborate that optimism, with Xinhua reporting that negotiators had discussed a draft text of the deal which included technology transfers, intellectual property protections, non-tariff measures, services, agriculture, trade balance and enforcement.
Commenting on the latest developments on the trade front, analysts at Danske Bank said a deal was likely in the back half of 2019 "and we expect it to be extensive".
Such a deal would, among other things, go a long way to rolling back tariffs, they said, and may even result in lower tariffs on some goods than before trade frictions began, a commitment to not devaluing the yuan versus the Greenback and "a range of agreements to protect US companies against Chinese competition".
But there was a 15% probability that the White House's next step would be an attack on the car industry and a trade deal was already largely priced into share prices, leaving risks largely balanced "if not slightly to the downside".
For FX markets, the Danish broker said a deal would likely support commodity currencies versus the Japanese yen and support euro/dollar on a three to six-month time frame, although the initial reaction might be "muted to negative".
Analysts at Citi were rather less effusive on the implications of a US-China deal, telling clients that it "may lift some uncertainty. However, it would also have disruptive effects as it would entail a mandated reallocation of Chinese purchases from the rest of the world to the US.
"As Chinese demand switches to the US, Asian economies would be the most exposed if trade flows are adjusted from a proportional market share perspective, while European economies face similar losses across all scenarios we consider."
Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange
Market.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN