US-China trade deal in 4Q? – ING

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According to Raoul Leering, head of international trade analysis at ING, failure to agree on the resumption of the negotiations during the G20 or failure to come to a deal after a new round of negotiations will inflict extra economic pain which increases the willingness to make concessions and strike a deal on both sides.

Key Quotes

“Let’s not forget: both sides want a deal in the end. China can hurt the US economically but it knows that the US can hurt China even more. President Trump needs a deal to show the American people that he delivers on his promises to get better terms of trade for the US. He knows that this is best done without the US economy having to suffer from Chinese retaliation for an extended period of time. We expect a deal to be struck in the last quarter of this year.”

“So it is likely that China as well as the US are prepared to make concessions in the end. After all, this is what’s happened in the renegotiation of Nafta. To strike a deal, Trump had to accept that Mexico and Canada would not agree to all of his original demands.”

 

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