U.S., China Are Close to a Trade Deal but the Trade War Could Continue

In the past few weeks, we’ve seen negotiations between the U.S. and China on the potential new trade deal plastered all over the news. But what many don’t know is how important is this deal and how does it affect working Americans?

Well, the stock market soars every time good news comes out about it. And plunges whenever bad news is announced about it.

So yes, it’s a very big deal.

And while many Trump’s supporters say he’s trying to get this done to everyone’s satisfaction because it’s good for the country and hard-working Americans, his opposers say otherwise.

Regardless, the potential deal is on many peoples’ minds these days.

Closing in on a Deal?

The Wall Street Journal recently reported that the two countries are “in the final stage of completing a deal.”

It would involve Beijing lowering tariffs and other restrictions on American farm, chemical, auto and other goods.

In exchange, Washington would remove at least most of the sanctions that have been levied against Chinese goods since 2018.

Talks held in Washington last month are the basis for these terms. But as of this writing, there are still many hurdles to overcome.

Negotiations on Pause… Again

While new tariffs were supposed to double on March 2, the negotiations were yet again put on hold. A new set of negotiations should occur late this month. That’s when Chinese President Xi Jinping meets with Trump in Florida.

If that meeting does take place, the stock market will be watching with a very close eye. Depending on the outcome, we can expect a significant jump or dive.

Some are saying Trump is desperate for a “win” due to the recent failed talks with North Korean leader Kim Jong-Un in Vietnam. That could mean Trump would be willing to compromise more to get a deal done.

Others are saying the opposite. They believe his walking away without a deal with North Korea proves he will do the same with China if terms are not favorable enough.

Trade Deficit in the Balance

One of Trump’s goals in striking a deal with China is to lower the U.S. trade deficit. It reached a 10-year high in December of $59.8 billion after being $50.3 billion the previous month.

Hurting the demand for U.S. goods has been a strong U.S. dollar and the overall slowing of global growth.

But if the Chinese were willing to agree to increasing purchases of U.S. goods by $1.2 trillion over six years – as has been suggested – the trade deficit would shrink.

Chuck Shumer is the Senate Minority Leader. He wants Trump to hold out as long as possible to get the best deal.

“What (Trump) did in North Korea was right,” Shumer said. “He must do the same thing in China. Hold out, because he has the upper hand, until we get China to do the right thing.”

U.S. and EU in a Food Fight

And speaking of trade wars, it appears there is still one going on between the U.S. and the European Union (EU).

Last summer, it looked like Trump and European Commission President Jean-Claude Juncker had reached a trade deal. Now… not so much.

Trump has said he wants agricultural trade barriers removed because they put American farmers at a disadvantage. And that the EU’s treatment of American farmers is “even worse” than China’s.

EU officials say agriculture is not on the table. But Trump says that if agriculture is not on the table, he’ll impose tariffs on imported autos and auto parts.

What Do You Think?

I’d love to know what you think about a possible summit between the U.S. and China later this month over the trade war.

Should Trump take a hard line and walk away if he doesn’t get what he wants? Even though that will negatively affect the stock market?

Or should he be willing to compromise more and accept less, knowing that the stock market will respond favorably to a deal.

Let us know your thoughts in the comments below.