Trump Pessimistic on China Deal; Optimistic on Mexico

Trump Pessimistic on China Deal; Optimistic on Mexico

U.S. President Donald Trump dampened hopes of a trade deal with trade China on Monday, saying now was “not the right time”.

Trump said he is refusing China’s offer to return to the negotiating table in order to reach a less “one-sided” deal in the future. “They want to talk,” Trump said, but “it’s just not the right time to talk right now. To be honest. It’s been too one-sided for too many years, for too many decades. So it’s not the right time to talk, but eventually I’m sure that we’ll be able to work out a deal with China.”

Trump’s comments have led some to believe that the U.S. President has no intention of coming to an agreement with China, and that the Chinese leadership are concerned Trump is stalling on a deal to stunt the Asian superpower’s growth.

Amy Celico, former Senior Director for China Affairs at the Office of the U.S. Trade Representative said, “For U.S. / China trade, it is going to be much more difficult to come to a short-term resolution, particularly if we sit back for a minute and look at some of the rhetoric coming out of this administration. The hawks are certainly in the ascendancy on China trade policy”.

U.S. / China trade talks have stalled since May, after Trump nixed a deal that would allow China to increase purchases of agricultural goods and energy to shrink the trade deficit, and very little progress was made during the latest round of talks last week in which the U.S.-proposed tariff of $200 billion on Chinese goods was countered with a threat of retaliation from the Chinese.

U.S. and Mexico Replace N.A.F.T.A.

The United States and its southern neighbour Mexico have agreed to replace the oft-criticised North American Free Trade Agreement (NAFTA), with President Trump urging Canada to join them immediately or risk losing out.

Speaking from the Oval Office, Trump said on Monday “They used to call it NAFTA. We’re going to call it the United States / Mexico Trade Agreement”.

Although Trump has changed the name, this new deal with Mexico is, in reality, no more than a tweaked NAFTA, with a few new provisions regarding labour organisations, the auto industry and the digital economy. The central tenet of NAFTA – tariff-free trade between the U.S. and it’s neighbours – remains unchanged.

According to Rob Carnell, economist at ING Bank, the Mexico deal will encourage Trump’s negotiation team to demand further concessions from China. Carnell said, “So as far as China and Asia are concerned, this new Mexico deal solves nothing. It strengthens the U.S. position to play hard-ball with China. This doesn’t look good for the region”.

 

Disclaimer:
This article is for educational and informative purposes only and should not be considered as investment or trading advice.

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