US and Chinese leaders discuss trade on the sidelines of the G20
Donald Trump will hold trade talks with Chinese President Xi Jinping today on the sidelines of the G20 Summit’s closing day.
The meeting will likely determine whether or not President Trump imposes 25 percent tariffs on an additional $300 billion of Chinese imports. Though both leaders have indicated that they hope to find a resolution to the trade dispute, neither has readily offered concessions that could make a long-term solution possible.
Today, cautiously expect Trump to agree to temporarily halt the implementation of the additional tariffs on Chinese goods while talks continue. However, do not expect the truce to hold up. Though the White House might be willing to ease a few restrictions on Chinese tech giant Huawei to bring Beijing to the table, the latter is unlikely to bend to Washington’s demands to enforce protections for intellectual property unless current tariffs are lifted.
In the medium term, talks are likely to stall. Such a scenario could see Trump imposing a lesser tax, possibly somewhere around 10 percent, on the addition $300 billion of Chinese imports. This state of trade limbo would maintain market uncertainty over the next year and likely lead to further contractions in global growth.
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