Negotiations between the parties to the trade conflict continue at a high level, but it seems that even with a favorable outcome, signing of a trade agreement between US and China will not have time to happen before the end of this year, as US Treasury Secretary Stephen Mnuchin gives the completion of the first stage at least five weeks. This stage of negotiations between the opponents is called the first phase, after which, according to experts, if the parties do not reach agreement, the situation can become much more complicated.
At this stage, both parties express doubts about the speedy successful conclusion of negotiations by signing a deal. Both the United States and China continue to defend their interests, although consensus has already been reached on some issues. The US is pushing for tariff increases, while China, in turn, is easing a wider range of trade duties.
Also, representatives of the East Asian country admit the possibility of signing the first phase of the trade transaction by the leaders of the two countries in the first half of December. If the negotiations are successful and agreement is reached between the parties, the trade battles between the countries will subside. From December 15, new tariffs will begin to apply to Chinese products, among which various celebration gifts traditionally occupy a large volume, which will be especially important on Christmas and peak annual sales. In total, more than $ 150 billion is expected in Chinese goods.
In the same case, if the signing of the trade agreement between US and China does not take place, then the the war of trade duties will continue next year, which will affect the world economy and, in particular, the US economy. Already, the expectation of the results of the first phase of negotiations between the countries participating in the trade conflict is affected by stock indices, for example, S & P last decreased by 0.8%, the value of the US national currency as well as the yield of treasury bonds.
What will be the reaction of exchanges to the possible continuation of trade wars? Based on the fact that global stock markets have dropped peaks held along with last 22 month, it can be assumed that the trend will be negative. The aggravation of tension in relations between the two most powerful economies of the world with its changes immediately affects the indices.
Obstacles to signing an agreement
The United States is concerned about issues affecting intellectual property, with which China has traditionally developed a kind of relationship, or rather, intellectual law when applying technology is practically ignored by many companies. For its part, China is embarrassed by the high demands of the United States, but in this country they still believe that the first phase of the negotiations of the two most powerful world economies will be completed successfully. This was announced according to Bloomberg News.
The next obstacle to reaching consensus of a trade agreement between US and China, according to some experts close to the White House, is Trump’s ability to change the parameters of already agreed transactions at any time. Also, the unanimity of various views within the White House on what approach to apply to an Asian country is not conducive to unanimity.
Another factor affecting the negotiation process is the Hong Kong protest, which continental China is stiflingly suppressing. The US, as the guardian of democracy, cannot accept many of the methods that the Chinese government use against protesters, who are most students.
Moreover, this week the Senate passed a document condemning the brutal crackdown on protests in Hong Kong. Also, the assembly legislatively declared support for autonomy, which immediately provoked a negative reaction from the Chinese authorities. The situation around Hong Kong does not contribute to the establishment of relations between the parties to the negotiations and the achievement of an early agreement. Any aggravation of the situation in Hong Kong could serve as a serious obstacle to the negotiations and even become the reason for their termination.
Another controversial issue in US-China trade relations was the distribution by the US government of licenses for the supply of goods for Huawei Technologies Co Ltd, the former blacklisted by administration.
As you can see, a lot of controversial moments on the way to the trade agreement between US and China prevent the parties to the trade war from reaching it. Initial hopes that a common language would be found fairly quickly were already dissolved in the protracted negotiations.
Even the initially optimistic Chinese do not believe that soon a trade agreement between US and China will be concluded. This is evidenced by the Chinese state tabloids – unofficial media expressing the official opinion of the ruling party of China. The Chinese have no illusions about the signing of a trade agreement between US and China this year and are ready to continue to live in a trade war with the most powerful economy in the world.
What should we ordinary citizens do in a trade conflict? The first advice is to keep your eyes open and be prepared to respond quickly to changes. Many reputable financiers predict a global economic crisis in 2020, not least because of the results of the trade confrontation with China. Probably cash money and cryptocurrencies will be in demand.