Just a week after U.S. Treasury Secretary Stephen Mnuchin declared  a “truce” in President Donald Trump’s tariff war with China, today the White House has announced that it plans to put a 25% tariff on $50 billion in Chinese exports to the United States.  By June 15, the Trump Administration will release a list of some $50 billion worth of Chinese goods that will be subject to a 25% percent tariff
Remarks by Treasury Secretary Steve Mnuchin and White House economics advisor Larry Kudlow over the weekend have the market feeling that the United States and China may avert a full on trade war. The Standard & Poor’s 500 stock index was ahead 0.65% as of 2:30 p.m. in New York on Monday. The Dow Jones Industrial Average is up 1.11%.
It’s actually amazing to me that U.S. stock markets weren’t down more today given all the uncertainty regarding trade relations between United States and China, between the United States and its NAFTA partners Canada and Mexico, and between the United States and the European Union.
Today, House Speaker Paul Ryan announced a May 17 deadline for the Trump administration to submit a proposal NAFTA revision to Congress–if President Trump wants this Congress to vote on a revised agreement. The odds of an agreement emerging from current talks and moving on to Congress on that schedule are just about nil. At the same time news of significant horse trading is coming out of U.S.-China trade talks.
Because of a fortuitous convergence of self-interest in Washington and Beijing that promise of 100-days of negotiations is likely to result in some meaningful trade concessions from China. Xi and China have an economic problem that greater trade with the United States can address–as long as that trade is in consumer goods.
