The United States and China are likely to ink a “phase one” trade deal because the presidents of both countries have incentives to do so, a Yale University professor said.
“There’s a better than 50-50 chance we will get a ‘phase one, skinny’ deal, largely because both presidents, Trump and Xi, need this for domestic political reasons,” Stephen Roach, a senior lecturer at Yale University’s Jackson Institute for Global Affairs, told CNBC.
Clinching the trade agreement with Beijing could help U.S. President Donald Trump “deflect attention away” from the political problems he’s facing on the home front, Roach said. Trump, for his part, is facing an impeachment inquiry in Washington.
“Make no mistake about it, the phase one deal, as we’ve been led to understand it, is a phony deal that will accomplish nothing in the way of meaningful positive impact on American families and American consumers,” he said.
Roach explained that while the preliminary agreement addresses the bilateral trade deficit between the Washington and Beijing, it fails to recognize the United States’ existing trade deficits with other countries. “This is a deal that is purely designed as a political fix,” he added.
If the two sides cannot pin down an agreement by Dec. 15, additional U.S. levies on Chinese exports are set to go into effect. Yale’s Roach said while it’s hard to predict the next “twist and turn” on the tariff front, he thinks Trump may be “prepared at this point to stand down a bit,” as the president did in October when he suspended a tariff hike on $250 billion of Chinese imports.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.55% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2020 TeleTrade-DJ International Consulting Ltd
TeleTrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. TeleTrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
TeleTrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.