US President Donald Trump and Chinas leader Xi Jinping will likely reach a compromise on trade at their G20 meeting, says Wells Fargo Asset Management. The Group of Twenty (G20) meeting kicks off on Friday in Buenos Aires.
“I am optimistic that they will strike a deal. I don't think it's going to be the deal that either side wants, but I think there will be some concessions,” said Kirk Hartman, global chief investment officer at Wells Fargo Asset Management as cited by CNBC. “I think this is more about protecting US technology as much as it is trade, so I think you will see some comments on that front.”
He said that Washington may delay higher tariffs on Chinese imports that were due to take effect in January. The sides may also agree to meet for further negotiations, according to Hartman.
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On Thursday, Trump told reporters he could be close to striking a deal with China on trade but was not sure he wanted to do it. He cited the money coming into the US in the form of taxes on Chinese imports.
“Because what we have right now is billions and billions of dollars coming into the United States in the form of tariffs or taxes, so I really don't know,” said Trump.
Reports that White House advisor Peter Navarro would be attending the dinner between Trump and Xi dampened hopes on the possibility of a trade deal. Navarro is known for his long standing hawkish tone on US-China trade.
“Both sides have so much at stake here that they are going to reach some kind of agreement,” Hartman noted, adding that any agreement at the meeting “will be extremely positive for the market.”
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However, some experts like veteran economist Stephen Roach are not so optimistic about the chances of a Washington-Beijing deal. Roach told CNBC the two nations could be in the early stages of a Cold War, warning that the global trade dispute is likely to last for a long time.
“I think the end game is that this is a clash between two systems. And the US is objecting to a state-sponsored market-based socialist system that uses the largess of the state to subsidize industrial policy,” said Roach, senior fellow at Yale University and former chairman of Morgan Stanley Asia.
The US has imposed a total of $250 billion worth of tariffs on Chinese goods since July, prompting China to retaliate with levies on $110 billion worth of US products.
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