Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US-China Trade amid America’s New Uncertainty

Politics / China US Conflict Jun 19, 2017 - 12:09 PM GMT

By: Dan_Steinbock

Politics As the White House is preparing to a political war for its survival, the Trump-Xi 100 day plan should overcome long-term pressures on US-China ties.

After the two-day summit at Mar-a-Lago, the US and China announced a 100-day plan to improve strained trade ties and boost cooperation between two nations. Soon thereafter, the US Department of Justice appointed Robert Mueller, the former director of the FBI (2001-13) as special counsel overseeing the investigation into the alleged Russian interference in the 2016 elections.


As the latter is likely to constrain the White House’s initiatives in the coming months, what will happen to US-China trade talks?

Three US-China trade scenarios

During the past three decades, US trade stance has shifted from one that used to be multilateral and inclusive to one that is increasingly bilateral and assertive. These policy stances can be condensed into three scenarios.

In the Multilateral Scenario, Washington would pursue multilateral trade agreements that include China (expansion of the WTO’s Information Technology Agreement concluded); the tariff-focused Environmental Goods Agreement; China’s negotiations to join the WTO’s procurement agreement; US efforts at a Trade in Services Agreement). This scenario is more typical to US administrations in the early days of China’s reforms and opening-up policies, when the mainland’s economic might was still marginal.

In the Bilateral Scenario, the US would intensify bilateral negotiations with China to liberalize trade through high-level bilateral dialogues, such as the US-China Strategic & Economic Dialogue and the US-China Joint Commission on Commerce and Trade (JCCT), while seeking to complete the Bilateral Investment Treaty (BIT). This is perhaps the scenario that former Treasury Secretary Henry Paulson, former CEO of Goldman Sachs, pushed in the second term of President George W. Bush. It rested on the idea that commercial interests also bring about political and strategic benefits.

In the Assertive Scenario, the US would take a more aggressive stand against China (dispute settlement cases against China in the WTO; threats of trade sanctions; greater use of US trade remedy laws, including antidumping and countervailing measures). In one way or another, the Obama administration adopted this scenario as it seized the WTO option and flirted with trade sanctions. In turn, the Trump administration initially also threatened to exploit aggressively US trade remedy laws against China.

In brief, there is more continuity between Obama and Trump than the Democrats would like to acknowledge.

Trade policy through executive actions

In his 2016 campaign, President Trump promised to renegotiate key US free trade agreements, including the North American Free Trade Agreement (NAFTA). After his inauguration day, he walked the talk and used executive order to pull out of the Trans-Pacific Partnership (TPP). NAFTA renegotiations are set to start soon.

As trade policy relies mainly on executive action, the Trump administration may opt for renegotiating deals rather than rejecting them, which would lower the downside risk. As the negotiations are to begin after mid-August, they will be followed closely by other bilateral trade agreements that will soon be on the table (South Korea, Japan, Taiwan). Since these talks are likely to endure through the fall, major trade friction that would undermine global growth prospects may be deferred until 2018.

What about the 100-day plan concluded during the Trump-Xi meeting at Mar-a-Lago? The effort is to improve strained trade ties and boost cooperation between two nations. However, if the plan fails to offer major breakthroughs after the summer, Trump’s trade hawks may resurface and deficit rhetoric could escalate again.

As the Trump administration must fight for its political survival, even as it would like to implement bold reforms, it seeks short-term wins to foster confidence. If the 100-day plan could generate significant results, it has potential to take the bilateral ties on a new level.

Unfortunately, the reverse is true as well. If the plan’s cooperative benefits are seen as inadequate, the net effect could be lose-lose scenario would benefit neither the US nor China – or global growth prospects.

Dr. Dan Steinbock is an internationally recognised expert of the nascent multipolar world. He is the CEO of Difference Group and has served as Research Director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore). For more, see www.differencegroup.net   

© 2017 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in