Neither side wants Dec 15 tariffs to go into effect
Chinese and American trade negotiators continue to wrestle with exactly which trade tariffs will be removed as part of a “phase one” deal between China and the United States and under what conditions, sources from both sides told theSouth China Morning Post,offering a possible explanation over the lack of visible progress.
There is still some modicum of optimism that a watered-down deal can be reached before new US tariffs go into effect on December 15, but even if the deal proves elusive, sources say it is likely they will be at least postponed.
The report lifted equity futures and risk trades briefly but they’re a double edged sword. While it’s good news that Dec 15 tariffs are unlikely, the market has priced in a good chance of the removal of other tariffs. This would simply extend the ceasefire and the associated economic uncertainty.
Trump hinted at this yesterday, saying that he liked things the way they are.
The Chinese report cited the unnamed source saying this:
“I don’t think you’ll have something big delivered by December 15, but I do think that you will have something that forestalls the tariffs because it is in both sides’ interests,” the source said.
Earlier today, chief Chinese negotiator Liu He said at a dinner that he was cautiously optimistic.
S&P 500 futures are up 2 points and USD/JPY is unchanged on the day. Here’s a great chart from ZeroHedge showing all the twists and turns in the US-China drama in the past 24 hours: