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Analysts at Nomura explained when regarding China, that they continue to anticipate further protectionism from the US, with 25% tariffs on $200bn imports from China likely to be announced relatively soon (i.e., when the USTR completes its analysis of the feedback it received in a public comment period that ended 6 September).  

Key Quotes:

“The Wall Street Journal reported on Wednesday that Treasury Secretary Steven Mnuchin had invited China to resume trade discussions. Sources for the WSJ report indicated that Secretary Mnuchin invited his Chinese counterparts, including Vice Premier Liu He.  

On Thursday, President Trump tweeted:

 “The Wall Street Journal has it wrong, we are under no pressure to make a deal with China, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing. We will soon be taking in Billions in Tariffs & making products at home. If we meet, we meet?””          

“The President’s denial of pressure for a trade deal even as China’s Foreign Ministry spokesman welcomed the invitation is not surprising, as we see increasingly fewer reasons for the Trump administration to divert from the gradual trajectory towards more protectionism, especially on China. That said, US and China could still pursue high-level discussions. However, given divided trade policy preferences within the administration and continued news flow that hints at President Trump’s preference for tariffs, it remains unclear if potential high-level talks will yield any meaningful results.”

“Further, the presidential tweet this Thursday adds to our skepticism about a potential deal prior to the next G20 leader summit from 30 November to 1 December, which both President Trump and President Xi are widely expected to attend. However, the apparent lack of indication that preparatory work between the two nations is under way suggests that it still remains unclear if a meaningful breakthrough could be reached even at this meeting (if it were to take place). Needless to say, headline noises on trade are likely to persist for a while.”

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