President Donald Trump will probably not need to hear at least many Chinese officials to conclude a truce on the trade war between the two sides, a senior administration official said.
Trump and Chinese President Xi Jinping are scheduled to meet Saturday at the G20 meeting in Osaka, Japan, with high expectations that the two leaders can reach some deals that at least would delay the exchange of reciprocal tariffs.
Administration officials’ opinions differ on whether a truce can be reached. However, one official said that some relaxation of the tensions between the countries is a very important thing at the White House and that talking about a truce was more than speculation.
An official said Trump was closely watching the stock market, which stalled during the week amid speculation about what would happen at the summit. The market was supposed to open higher on Friday but is on its way to reaching a loss for the first week after three consecutive weeks of gains.
The official also said the main thing that would stop the truce would be if Xi declared that he would not be willing to impose any agreement or write it in Chinese law.
Trump is meeting with other officials at the summit, but he continued to tweet about a variety of issues including Democratic presidential debates and market views.
Markets have often been optimistic about the prospects for a deal, although investors were sensitive to negative news headlines from developments over the past year.
The negotiations continued in stages as tensions escalated, and the United States sought to reduce the trade deficit with China, which reached 419.5 billion dollars in 2018, an increase of about 12 percent despite Trump’s efforts to use tariffs to reduce the gap. The administration imposed a 25 percent tariff on Chinese imports worth $250 billion and Trump threatened to charge the rest of the $300 billion of goods flowing into the United States.
Although the markets may see a truce as a positive factor, there is little expectation of major developments at the G20 meeting.
“Consensus expects can-kicking, but no rolling back of tariffs that are already in place. With above-trend economic growth and the S&P 500 at an all-time high, there is no sense of urgency on the part of the US to reach an agreement,” said Bank of America Merrill Lynch.
The “real deal” between the two sides could push the S & P 500 to 3100 or about 6% higher than Thursday’s close, while the additional tariff has the ability to send the index by 5% lower.