CHINA STOCK MARKET CRASH 2019| Trade War vs Trade Deal| Trump Hikes Tariffs Against China

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China Stock Market Crash 2019. Trade War. Global Trade War. Stock Market News. Trade Deal. President Donald Trump Raising Tariffs on China. Stock Market Analysis.

Here’s what strategists say about the U.S.-China tariff war
“President Trump’s announcement that the tariff rate on $200bn of imports from China will rise from 10% to 25% lowers the odds of a successful conclusion to US-China trade talks and raises the odds of further tariff escalation. However, we think it is more likely that the increase will be narrowly avoided and believe the odds of tariffs increasing on Friday are 40%.”
“Unless China walks away from the talks (which is not necessarily the same as Vice Premier Liu He canceling his trip but rather having no talks at all), we do not expect an escalation of trade tensions into a trade war. Still, we note that the probability of a ‘Trade War today, Trade Deal tomorrow’ scenario remains high, with the potential to accelerate US inflation and to extend the timetable for a US-China trade deal into the 2020 electoral year. We are cautiously optimistic on a US-China trade deal in 2Q but with the tariffs-threat to remain as a way to get concessions from China and to enforce the agreement. ”
“There are no clear reports indicating what led President Trump to harden his stance on trade talks, with media reports suggesting it was designed to ‘send a message’ or was in response to China backtracking on previously negotiated points. The timing of the threat suggests it is a tactic designed to increase leverage going into final trade negotiations”.
Raymond James
“The progress towards a US-China deal has been up-ended with renewed tariff threats by President Trump (25% tariff on $200 billion in Chinese goods by Friday + 25% on $325 billion more), apparent balks by the Chinese (especially on tech transfers), and the threat of the Chinese delegation canceling this week’s round of negotiations. We have previously seen President Trump threaten a new tariff package in the lead up to last year’s G20 meeting last year, only to use it as negotiating leverage, leading to speculation that this is President Trump seeking to use the new tariff threats to get a deal across the finish line. Based upon our conversations with our trade contacts, there appears to be a universal belief that this is not negotiating leverage, but what was almost a done deal last week, has derailed in recent days. There is some hope that negotiations could be salvaged, but this situation highlights how tenuous any US-China deal remains.”

Morgan Stanley
“It could be a pressure tactic to speed an agreement on pending issues such as existing tariff removal timing, details related to the enforcement mechanism and industrial subsidies. While we expect a re-escalation would be temporary, as market weakness would help bring both sides back together, any escalation inherently augments uncertainty and further undercuts risk markets, where a Goldilocks outcome was already priced in.”
Bank of America
“The immediate market response suggests that the latest escalation of the trade war was a complete surprise to investors. This means that markets could be in for a bumpy ride before a trade deal is reached.”
J.P. Morgan
“We think President Trump’s comment on China’s “attempt to renegotiate” may reflect his likely frustration with the progress on some structural issues (as China may have resisted on US demands in some key areas); alternatively, China may have pushed hard for the US to roll back on the existing tariffs. As such, the near-term outlook on the trade negotiations has become somewhat unclear, and the next few days would be crucial to watch.

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