President Trump’s trip to the G-20 meeting in Argentina may be called “Let’s Make a Deal.” He is supposed to meet with Chinese President Xi Jingping Saturday for dinner, and analysts expect the President to discuss the current trade standoff with Xi.
Height Capital Markets Vice President Clayton Allen’s most recent note on the G-20 tells clients he believes the President is willing to negotiate now more than at any other period in the trade dispute despite recent threats from Trump to escalate it. Allen calls it one of Trump’s negotiating tactics, “…the use of last-minute threats as a way to ramp up pressure immediately before a meeting.”
But Allen doubts there will be any detailed settlement negotiated to end the trade dispute writing, “We still expect the best possible result this weekend will be a temporary pause in tariffs, including the remaining $267 billion in Chinese imports…”
Trump has threatened to raise the existing 10% tariff on $250 Billion of imported Chinese goods to 25% in January if the countries fail to end the dispute with the threat of new tariffs on an additional $267 billion of goods not currently subject to tariffs. Allen predicts the new tariffs will be applied in stages rather than all at once if Saturday’s meeting between Xi and Trump fails to produce at the very least a pause in the dispute.
But one noted China expert hopes there is no temporary pause or for that matter any deal.
“We are bleeding technology and so the pain and the cost to the US to actually entering into a deal is far greater than not dealing with them,” said Gordon Chang, author of the “Coming Collapse of China.”
Chang told Yahoo Finance there is enormous pressure on Xi that makes it difficult for the Chinese leader to deal with the United States in good faith.
“He owns this trade struggle with the US and if he doesn’t prevail he will be blamed by his opponents. He has no incentive to compromise” Chang said.
But Height Capital’s Allen points out that President Trump celebrates his public persona as a “master dealmaker”. Allen says it may be more important for the President to announce a deal without details in order to save face. Allen cites the rollout of the “deals” with North Korea and the EU which, “..are more accurately described as ongoing talks.” According to Allen, President Trump will most likely announce a “deal” with Xi that keeps open the possibility of additional talks, promises additional purchase of US goods but ultimately doesn’t force any immediate changes.
Adam Shapiro is an anchor for Yahoo Finance. Follow him on Twitter @ajshaps.