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Amy Yuan Zhuang, Research Analyst at Nordea Markets, suggests that the expected Trump-Xi meeting at the G20 summit in late November offers the first chance for a trade truce in months.

Key Quotes

“A swift settlement is not on the cards as neither side is willing to compromise about China’s technological progress.”

  • After a relatively quiet month without much news on the trade war, we will likely see more action in November.
  • It has been confirmed that Trump and Xi will meet at the G20 summit in Buenos Aires in late November. Both sides have warned against having high expectations about the meeting. The US has turned up the heat by threatening to impose a new round of tariffs on all remaining Chinese imports if the meeting does not yield results.
  • Maximum pressure from the US has turned the trade conflict into a game of chicken. Neither leader has shown signs of conceding. Thus, it is still likely that the trade war will escalate further.
  • Such a move will hurt not only Chinese exports but also US consumers in terms of higher prices.
  • Beijing is preparing for the trade war to drag on. It is stepping up stimulus in all sectors to keep growth stable this year and next.
  • It has also adopted a new tactic for the CNY. The PBoC’s larger tolerance for a weaker yuan is likely to leave the bank with more intervention options for later use.”