• President Reaches ‘First Step’ in Resolving Trade Issues with China — We Hope

    Surge Summary: China and the U.S. have brokered an apparent deal on trade issues – only a first step, but what looks to be progress on prickly concerns between the two nations.

    Trade! China! US! Tariffs! It seems like a constant refrain on the news front.

    Well, perhaps we’ve taken a step to bring the story to a bit of a close …

    If so, however, it’s only a step.

    Neal Freyman at morningbrew.com informs …

    [Over the weekend], the U.S. and China finally came to the realization that the trade deal they’ve sought is like a huge slab of chewy strip loin. You can’t possibly eat the whole thing without cutting it up first.

    President Trump said the two economic rivals reached “a very substantial phase one deal” following two days of high-level negotiations in D.C. What’s in the deal? Well…we’ll get back to you. It’s still being hashed out over the next few weeks.

    Here are the basics so far:

    Those supposed tarrifs that were going to take effect next week? Taking aim on $250 billion of Chinese products? Treasury Secretary Steve Mnuchin says they will not be going into effect. (No definite word on other levies scheduled for a December 15th activation.)

    China has agreed, in exchange, to purchase $40–$50 billion of U.S. agricultural goods, which is very good news for American farmers. Additionally, Xi and Company have pledged to open up China’s financial services sector, and grant concessions on intellectual property and currency manipulation.

    But as Bloomberg points out, some of the stickiest issues remain quite sticky: China’s alleged IP theft, the forced transfer of tech secrets, and the unusually generous subsidies it hands out to domestic companies.

    Thus, this move is hardly the comprehensive trade deal most wanted. But…it is a start in the right direction, an apparent positive because

    [c]entral bankers, global corporations, and deteriorating manufacturing numbers have been pointing to the U.S.-China trade war as an anchor weighing on global economic growth. The new head of the IMF said earlier [last] week the conflict could cost the global economy $700 billion by 2020.

    Stocks seemed to agree, at least initially, bouncing on early reports that a deal had been reached. The Dow, S&P and Nasdaq have since retreated a bit as questions have emerged about the agreement.

    CNBC cautions:

    Trump said the phase one deal was a success, but China’s characterization of the outcome was far more muted. Chinese state media said both sides made “substantial progress” but did not use the world “deal” when describing the outcome.

    So, by any characterization … progress. It’s unclear how much, however.

    Here’s hoping the “progress” continues.

    H/T: Neal Freyman/morningbrew.com

    H/T: Fred Imbert/NBC

    Image: By PAS China – President Trump Talks Trade with the Vice Premier of the People’s Republic of China, Liu He, 2018, Public Domain, https://commons.wikimedia.org/w/index.php?curid=71563379

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