Trade warriors: What to watch for as Trump and Xi meet at G20
Issues include tariffs, technology transfers and potential concessions to keep negotiatingPresident Trump renews his threat of $300 billion in new China tariffs on way to G20 summit, though they could be reducedU.S. consumers stand to lose most if talks break down and Mr. Trump imposes tariffs that could hike prices for Americans on everything from fireworks and bibles to clothing and shoesPresident Donald Trump is scheduled to sit down with Chinese President Xi Jinping on Saturday in Japan as the G-20 summit concludes, a pivotal meeting that may mean a path out of an escalating trade war if things go well.
If things don’t go well, it likely means U.S. consumers can expect to pay more for everyday goods — and even serve as collateral damage in an entrenched trade war that has broader-reaching consequences for the global economy.Here’s what to look for on Saturday.
A pause, if not an agreementChances of a ceasefire are about 50% “with neither an unwinding nor an escalation,” Mark Haefele, the global chief investment officer at UBS’s global wealth management unit, wrote in a note to clients this week. He pegged chances of talks falling apart and the trade war escalating at 35%, with just a 15% chance for a “de-escalation” in tensions following the summit. He’s not alone. Raymond James analyst Ed Mills is predicting “a truce on escalation with potentially some minor concessions from both sides” that pave the way for more talks, he said in a note this week.Height Securities analysts see a pause of 90 to 120 days or even an “open-ended” period with Mr. Trump promising to pull the trigger on more tariffs if he feels China isn’t cooperating.
A short meeting may not bode well for a speedy resolution, and the world is watching. In Argentina last December, Mr. Trump and China’s Xi met for more than two hours, leading to further negotiations before talks fell apart this spring, Mills noted.”I will tariff … maybe not at 25% but maybe at 10%”Mr. Trump in recent days has swung from optimism toward the meeting and threatening further escalation – some of it tempered from previous threats, including imposing tariffs on roughly $300 billion in imported Chinese goods that aren’t already subject to levies the White House has imposed over the past year. The U.S. imports roughly $600 billion in goods from China annually.”My Plan B is that if we don’t make a deal, I will tariff. And maybe not at 25% but maybe at 10%,” Mr. Trump told Fox Business Network on Wednesday before leaving for the summit. Larry Kudlow, Mr. Trump’s top economic adviser, on Thursday told CBNC there are “no preconditions” set ahead of the meeting, adding the White House could move ahead with the new tariffs. Mr. Trump imposed an increase to 25% on $200 billion in imported Chinese goods after talks disintegrated earlier this year, just as Wall Street was betting an agreement was close. A Chinese foreign ministry spokesman in Beijing said China intends to defend itself against such U.S. moves to penalize it over trade friction. Such threats “won’t work on us because the Chinese people don’t believe in heresy and are not afraid of pressure,” the spokesman told the Associated Press.