Trump may have to make deal with China as markets fall

Business


However, Dutt said the U.S. and China are unlikely to come to a comprehensive deal at the end of the 90-day truce, though there will likely be some sort of a smaller agreement.

“They are negotiating over very complex and difficult issues — so this is not just about ‘I’ll buy some more soybeans and natural gas’ and ‘you provide market access and cars,'” said Dutt.

The two countries slapped a series of punitive tariffs on each other’s goods last year, sparking concerns over a global economic slowdown. The U.S. has already put tariffs on $250 billion worth of Chinese goods — and has threatened additional duties on double that value of products. Beijing has responded with tariffs on $110 billion in U.S. goods targeting politically important industries such as agriculture.

After a December meeting between Trump and Chinese President Xi Jinping, the leaders of the world’s two largest economies agreed to a temporary truce while they sought an agreement within three months, ahead of a March deadline. Trump said he would not carry out a planned increase in the tariff rate on $200 billion in goods to 25 percent from 10 percent that was initially due to take effect on Jan. 1.

Washington has previously accused China of forcing technology transfers, and tacitly supporting intellectual property violations and cyber-crime, but those issues were downplayed in official descriptions of the December agreement between Trump and Xi.

Many of the ongoing issues Washington has had with Beijing have been going on for many years, Dutt said, adding that a lot of them are key to China’s national economic development strategy.

The most likely outcome is that “China gives some minor concessions as it has done in the past, either on the technology transfer or the intellectual property, or also market access for goods and energy,” he said. “That allows the Trump administration to declare victory and move on.”

— Reuters and CNBC’s John W. Schoen and Jacob Pramuk contributed to this report.



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