Optimism Soars As Trump Closes On Trade Deal With China

DOW up 300 points, China’s stocks at 3 year high

As the United States and China draw closer to a deal to end a trade war that has lasted over a year, their respective stock markets have soared in anticipation of a return to normalcy.  President Trump and Chinese President Xi Jinping set a deadline of March 1st to come up with a resolution to the current trade war, it appears as if it will be narrowly met.   Today, President Trump declared that he is ready to set a date for a signing summit for the deal.

Early reports indicate that the President may be gaining substantial concessions from China on issues ranging from technology, to intellectual property, to the over $300 Billion trade deficit between the two countries.  Perhaps China’s most substantial concession has been its promise to eliminate its trade surplus with the United States completely by 2024 by going on an over $1 Trillion buying spree over the next 6 years.  Another important concession that appears to be on the horizon is a recent bill that is making its way through the Chinese government to protect foreign intellectual property and businesses operating in China.

Many of Trump’s opponents in the Democratic Party have been critical of his handling of the ongoing trade war with China.  A number of Republicans have also attacked the President on this issue.  As recently as December, many were speculating that Congress, including the Republican held Senate, would even attempt to step in and override the President’s tariffs on China.

Many industries hit hardest by the trade deficit and China’s trade policies, such as steel dumping, have already seen a boon because of the tariffs imposed by the President.  In the wake of President Trump’s tariffs on steel, prices rose by roughly 33%.  Farmers, who are often touted as one of the primary victims of the US-China trade war, have also seen a substantial boost.  China has promised to import more soybeans as part of its attempt to bring an end to the trade war, leading to economists estimating that China will import its highest number of soybeans from the US since 2006.

Written by Adam Wilson

Adam Wilson is a contributor to The Schpiel.


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