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Wednesday, June 26, 2019

Deal or no deal? The stakes are high for the Trump-Xi trade

Deal or no deal? The stakes are high for the Trump-Xi trade

Summits such as the G20 held this week in Japan are often an opportunity for geopolitical dating. President Trump has scheduled meetings with at least eight world leaders over the next three days. None is more consistent than his meeting on Saturday with Chinese President Xi Jinping.

The two big and very different personalities will be competing for global power and economic power, with hundreds of billions of dollars in trade on the line.

"They may have an incentive to make a deal and shake hands," said Matthew Goodman, who worked in the administrations of Obama and George W. Bush. "I think that is the least likely result, the other extreme is that they have a collapse and decide that they are going to climb more, that is possible, but I think it is not the most likely."

Like many observers, Goodman believes that the most likely course is a temporary truce that leaves the tariffs in effect but postpones additional taxes on Chinese imports, while the two parties return to the negotiating table. Although Trump has threatened to impose tariffs on other Chinese products worth $ 300 billion, it would be costly for both countries.

"At the very least, I think it's in the interest of the US to suspend the next round of tariffs," said David Dollar, who studied China at the Treasury Department and the World Bank. Otherwise, he said, "I think it's going to have a very serious effect on the economy of the United States and a bad effect on the markets."

The stock market recovered last week when Trump said he had had a "very good phone conversation" with Xi. However, many observers are skeptical that countries can quickly come to an agreement that would address all the concerns of the United States about the protection of intellectual property and the forced transfer of US knowledge to China.

"I just do not see how that can be negotiated in the next few days," Dollar said.

The White House also downplayed expectations for the Xi meeting and said Trump is comfortable with any outcome.

In general, the USA UU They could expect some support from the allies around the G-20 table, many of whom share Washington's concerns about China. But Trump, on the other hand, has pursued a strategy of going it alone, while looking for commercial fights with Europe, Japan and its neighbors in North America.

"What we're doing is saying out loud that we're the sheriff and there's a bad guy at the end of the street and we're going to catch him," said Michael Green of the Center for Strategic and International Studies. "We are convening a gang together, which would be Japan and Europe, and then we are shooting them."

Far from encouraging the international community, Trump often reaches out. In fact, it is unclear if the president will accept the traditional joint statement at the end of the G-20 summit if other countries insist on including warnings about protectionism or the dangers of man-made climate change.

That could be uncomfortable for Japan, which hosts the summit. Prime Minister Shinzo Abe, who has often courted Trump both on and off the golf course, will try to preserve an aspect of international cooperation.

"He wants to have a functional G-20," said Mireya Solis of the Brookings Institution. "But with an unconventional president and an open critic, I think it's going to be an uphill battle."

Abe will hold his own personal meeting with Trump where they are expected to discuss a possible trade agreement between the US. UU And Japan. Trump's withdrawal from a large Asia-Pacific trade pact has left US exporters at a disadvantage in Japan. Trump wants to reach a new agreement, but if that does not work, he resists the threat of high tariffs on Japanese cars.