US-China trade war's tit-for-tat retaliation abating: Goldman Sachs

Goldman Sachs says the tit-for-tat trade war between the U.S. and China is showing signs of abating.

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The New York investment bank, which had previously predicted the tariff increases scheduled for Dec. 15 would be delayed until early 2020, now says tariffs have "likely peaked" and won't increase any further. Alec Phillips, the bank's chief U.S. political economist, points to recent reports suggesting the two sides are making progress in finalizing a phase one deal as the reason for the bank tweaking its outlook.

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Phillips thinks comments from members of the Trump administration suggest there’s a clear link between a phase one agreement and the tariff increase on $160 billion of Chinese goods scheduled to take place on Dec. 15, timing that was intended to protect holiday shoppers from the bulk of the increase.

Finally, Phillips says the cancellation of next month’s Asia-Pacific Economic Cooperation summit in Santiago, Chile, means President Trump and Chinese President Xi Jinping’s meeting will occur closer to the scheduled Dec. 15 increase, and that the two sides could use the proximity of the two events to call off the tariffs.

The U.S. and China are progressing toward the first portion of a broad trade deal that may have two or three segments, according to President Trump.

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On Tuesday, The Wall Street Journal said the two sides are considering rolling back tariffs that are already in place. The Office of the U.S. Trade Representative didn't respond to FOX Business’ request for comment.