New China Deal Investors May be Disappointed

November 28, 2018
1070 Views

Many investors have been hit personally from falling stocks on the back of tariffs and increased trade tensions this year. Some of the largest tech stocks, including Apple, have been significantly devalued due to the new China deal and the deteriorating relationship between the United States and China.

Investors are hopeful that the tit-for-tat tariffs and rhetoric will end soon. There was initial optimism that an upcoming meeting between President Trump and Chinese President Xi Jinping would result in the foundations of a new trade deal, but recent comments from Washington cast some doubt on that prospect.

Top White House Advisor Unsure if China Takes Trump Seriously

Larry Kudlow, the Director of the National Economic Council and one of Trump’s top advisors, said in recent comments that “I don’t know if the Chinese take him seriously. They ought to.”

China has so far seemed very unwilling to meet America’s demands on trade. Rather than engage in productive talks, both nations have instead entered a battle of tariffs and rhetoric throughout this year.

Kudlow said that “I am very disappointed, and I know the President is extremely disappointed, and hence the dinner on Saturday night is an opportunity to turn a new page, break through. President Xi can step up and come up with some new ideas for us.”

President Trump and President Xi will meet during the G20 summit in Buenos Aires this weekend.

The President fired a warning shot earlier this week when he said that he would implement new tariffs if he is unhappy with the upcoming meeting. Trump could place tariffs on previously exempt Chinese exports, including Apple’s iPhone and MacBook computers.

As it is today, the government is still scheduled to implement 25% tariffs on up to $200 billion of Chinese goods by January 1. Trump said earlier this week that it is ‘highly unlikely” that the tariffs will be suspended.

Comments from both Kudlow and Trump are indications that the White House is not overly optimistic about a positive outcome from the new China deal and the G20 summit.

 New China Deal: Investors Prepare for Market Impact

The market could lose even more confidence if there is no positive news following the meeting between Xi and Trump. If the White House could at least confirm that no new tariffs were incoming, then it would go a long way towards easing the minds of some of the more cautious investors, particularly those who focus on vulnerable tech industries.

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