Hawaii Six O - Gary Wagner
Trade war "phase one" - what progress is really being made?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
It seems that from day to day, the news regarding forward progress, and concessions made by the United States and or China seem to change. The one certainty is that the words of the officials on both sides lack longevity.
According to ABC News yesterday it was announced that China and the U.S. agreed to rollback tariffs in phases, as told to them by a Chinese official.
China’s Commerce Ministry Spokesman Geo Feng said negotiations between Beijing and Washington have agreed to a “phased cancellation” of tariffs hikes if talks continue to progress, this according to the Associated Press. On Thursday, a Trump administration official confirmed the accuracy of the reports of an agreement to rollback tariffs as part of the “phase one” agreement.
This news had a dramatic effect on the financial markets in the United States. The precious metals which are safe haven assets sold off sharply, and the Dow and S&P 500 closed at new record highs.
Not so surprisingly today it was reported that President Trump said he had not agreed to rollback tariffs on Chinese goods.
As reported by Reuters, “President Donald Trump on Friday said he has not agreed to rollbacks of U.S. tariffs sought by China, sparking fresh doubts about when the world’s two largest economies may end a 16-month trade war that has slowed global growth.”
According to White House officials the idea of tariff rollbacks was met with stiff opposition within the Trump administration. President Trump who has described himself as “Tariff man” told reporters at the White House that China wanted to make a deal more than he did, adding that the U.S. tariffs were generating “billions of dollars” for U.S. coffers. “I’m very happy right now. We’re taking in billions of dollars.”
Which brings us to the primary issue about news being reported about the trade war. First is that most announcements seem to have an extremely short shelf life. What is reported yesterday is very often reputed the following day. This leaves the public in a constant state of confusion as to what progress has actually been achieved, and most importantly whether or not any real progress has come from these intense negotiations.
The constantly changing headlines have had the effect of frequently changing market sentiment. The only certainty that remains regarding progress being made to resolve the trade war is that there is extreme uncertainty and confusion. The rapidly changing information reported about progress leaves the public wondering if negotiations have taken one step forward or two steps back.
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Wishing you as always, good trading,