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After months of saber-rattling by President Trump and his Chinese counterpart, Xi Jinping, what is next for the economic giants/rivals? Several commentators weighed in as the prospects of a deal approached the precipice of reality.
On Wednesday, JP Morgan Chase CEO Jamie Dimon spoke at the Business Roundtable and said while he was optimistic about reaching a “Phase One agreement” he added, “it will be very hard to have a real negotiated deal after that.”
To that end, some experts think it is time both sides “end this tit-for-tat tariff cycle.” Riley Walters, a policy analyst for The Heritage Foundation, recently wrote, “Washington and Beijing should remove the punitive tariffs that have been applied over the last year. Washington and Beijing should even consider removing other tariffs that pre-date the Trump administration.”
Stephen Roach, former chairman of Morgan Stanley Asia, still sees trouble ahead. “America’s multilateral trade deficit reflects a profound shortfall of domestic saving that will only get worse as the federal budget deficit now veers out of control,” Roach, who is now a faculty member at Yale University, recently wrote in a piece titled “After the US-China Trade War.”
“Without addressing this chronic saving problem, targeting China will mean pushing the Chinese piece of the multilateral deficit on to America’s other trading partners,” Roach declared. “Such diversion will shift trade to higher-cost foreign sourcing – the functional equivalent of a tax hike on US consumers.”
At JP Morgan, Head of Asian Investment Strategy Alex Wolff and Global Market Strategist Yuxuan Tang are no more sanguine than their boss, Dimon. In a note published when the term “Phase One” first started to make the rounds, they wrote, “We don’t see this Phase One agreement leading to a more substantial comprehensive agreement.”
Noting how U.S. soybean farmers have been hit hard by the tariffs as China imports roughly $40 billion in soybeans annually, the duo simply stated, the deal is “all about soybeans.”