Trade deal may be dead, Trump says relationship with China is “badly damaged”

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TOPLINE

President Donald Trump told reporters on Friday that he was not even considering a phase two trade agreement with China, saying relations between the two countries had been “severely damaged” by the coronavirus pandemic.

HIGHLIGHTS

With Sino-US relations continuing to deteriorate in recent months, Trump said a phase two trade agreement between the two countries now looks very unlikely.

“I don’t think about it now,” said Trump when asked if a phase 2 deal with China was still on the table. “Relations with China have been badly damaged.”

Trump’s comments come as countries continue to clash over a wide range of issues: President has accused the Chinese government of not containing the coronavirus epidemic, while U.S. lawmakers have also increasingly pushed back China by strengthening its grip on Hong Kong.

The stock market maintained gains on Friday despite the bad news, signaling that investors may already be skeptical of the prospects for a phase two deal.

Indeed, Wall Street analysts have for some time expressed substantial doubts about the execution of the phase one trade agreement and the progress of trade negotiations.

As part of the Phase 1 agreement signed in January 2020, China has committed to buying $ 200 billion worth of U.S. goods, including soybeans and pork, but many experts quickly pointed out that these targets ‘weren’t realistic; this skepticism is growing amid growing tensions and economic fallout from the coronavirus pandemic.

Crucial quote

“They could have stopped the plague, they could have stopped it, they did not stop it,” Trump said on Friday about China’s handling of the pandemic.

To monitor

It is highly unlikely that China will even fulfill its purchase obligations under the phase one agreement, said Evan Rees, Asia Pacific analyst for Stratfor, a RANE company. Forbes last month. “Although still intact, the longevity of the Phase 1 trade agreement is increasingly being questioned for many reasons, with many triggers that could derail the agreement, including Hong Kong, Huawei , Taiwan, the South China Sea and several human rights issues, “he said.

Key context

The U.S.-China trade war began in 2018, and trade negotiations then collapsed in May 2019. This initially resulted in higher tariffs, but negotiators resumed talks in the fall. After months of protracted negotiations that weighed on market sentiment, the long-awaited first phase agreement was signed in January 2020. The centerpiece of the agreement was China’s commitment to buy $ 200 billion. dollars of American products like soybeans and pork, but experts initially wondered if these goals were realistic – and now, amid growing tensions and economic fallout from the coronavirus, they seem even less likely to be achieved. Trump, for his part, said last month that the first-phase trade deal remains “fully intact”, following previous comments by trade advisor Peter Navarro, which seemed to suggest that the deal was “terminated”.

Further reading

China warns of US ‘interference’ in Hong Kong that could derail phase 1 trade deal v

Trump announces new sanctions against Chinese authorities, but does not cancel phase one trade deal (Forbes)

Actions Become Positive After Trump Maintains Phase 1 Trade Agreement With China (Forbes)

China vows to confirm first-phase trade deal that includes $ 200 billion purchase of US goods (Forbes)

Stocks Reach Record Levels As US Signs Phase One Trade Agreement With China (Forbes)

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