Kudlow backtracks on Trump tweet announcing vehicle deal with China
Dec 07 2018
-China trade cease-fire, contributing to a broad stock market plunge and intensifying fears of a global economic slowdown.
The 90-day truce in the escalating trade war between the US and China came during a dinner meeting between the two presidents following the G-20 summit of the world's industrialized and emerging economies in Buenos Aires.
The Dow Jones Industrial Average shed 3.1% while the tech-dominated Nasdaq was nearly 4% down by the close.
After the leaders of the world's two biggest economies agreed to a temporary pause in their trade war, .
John Williams, president of the Federal Reserve Bank of NY, also unnerved investors by telling reporters Tuesday that he supports further Fed rate hikes.
Officials from the United States and a number of other major economies have often criticized China for its slow approach to negotiations and not following through on commitments.
And in the United States, home sales have fallen sharply in the past year as mortgage rates have jumped. Fentanyl, mixed in with heroin, has caused a spike in drug overdoses in the U.S. -China agreement in Buenos Aires as a historic breakthrough that would ease trade tensions and potentially reduce tariffs.
Volkswagen AG and Daimler AG executives both said they thought the chances that new tariffs will be imposed had been lessened following the meeting.
He wrote on Twitter yesterday: "President Xi and I want this deal to happen, and it probably will". In a series of Tuesday morning tweets, the president showed optimism about reaching a "fair deal", but stressed that he is "a Tariff Man" if talks fail.
Trump again claimed Tuesday that more tariffs on China would actually help the U.S. He contended that he has made China "pay for the privilege" of raiding "the great wealth of our Nation".
There are several significant take-aways from this development, including the argument that Trump's hard line, even at times belligerent stance with Beijing, has caused them to blink first, particularly since economic growth in China has already started to feel the brunt of USA tariffs, while US economic growth, though not as robust as a few months ago, is still strong. In his tweets, the president said his advisors will work on "seeing whether or not a REAL deal with China is actually possible".
Tariffs have proven taxing on many companies, especially those with global supply chains and suppliers in China.
The president's words had the effect of making the weekend agreement, already a vague and uncertain one, seem even less likely to produce a long-lasting trade accord.
The day after Xi and Trump met, the WeChat account of the People's Daily's overseas edition published an article detailing some of what was discussed at their talks.
If the move is indeed true, it would be a positive one as the automotive industry has suffered the consequences of the growing U.S.
In addition, Treasury Secretary Steven Mnuchin said on Tuesday on the Fox Business Network that China agreed to buy $1.2 trillion of USA products.
It did not give further details but it crucially did not contradict the U.S. president's remarks that China would buy more goods from the United States to help close their trade gap and structural changes to intellectual property protection.
Goldman Sachs analyst Alec Phillips said the USA and China made little concrete progress at G20, which was what he anticipated heading into the meeting. The downside for China is that it also needs USA sourced LNG as its insatiable gas demand expands amid Beijing's mandate that gas make up at least 10 percent of its power generation energy mix by 2020, with further earmarks set for 2030.
Mr Trump said this week on Twitter that Beijing had agreed to "reduce and remove" tariffs the 40% tariffs it places on U.S. cars.
Many economists have expressed skepticism that very much could be achieved to bridge the vast disagreements between the two countries in just 90 days. "The meeting with the president was very good and very open". "Farmers, I LOVE YOU!" the United States president tweeted.
President Donald Trump threatened Tuesday to slap more tariffs on China if efforts to strike a trade deal with Beijing crumble.