Stocks Jump After Good News on Trade Deal

October 11, 2019
318 Views

The ongoing trade war between China and the United States has had a significant impact on the stock market since 2018. The last week has seen some mixed messages in the news. When markets opened on Monday, there were fears that negotiations could stall as China reportedly refused to talk about Trade Deal key issues.

However, a Thursday tweet from President Trump suggested that a deal could be very close, and Asian markets jumped on Friday morning. American markets could now follow suit.

Will a Limited Trade Deal Be Signed Today?

There were low expectations going into the negotiations this week, but the President turned it all around in a single interview. When speaking to reporters at the White House on Thursday, Trump said that “We’re doing very well. We’re going to see them tomorrow, right here, and it’s going very well.”

Although the statement doesn’t reveal anything definite, analysts have suggested that this could mean that a temporary trade deal will be signed on Friday. If it happens, the deal would likely be limited in scope, but it may prevent new tariffs while a larger deal is finalized.

In a Tweet on Thursday evening, the President suggested that China already has a deal in place, but he was cryptic on whether he would agree to it or not. He told his 65.5 million followers, “Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at the White House.”

Could This Prevent Incoming Tariffs on Consumer Goods?

The big question surrounding the negotiations is whether the conversation will be positive enough to prevent new tariffs taking effect next week and in December.

  • There is a planned tariff increase from 25% to 30% on $250 billion of Chinese imports for next Tuesday.
  • On December 15, new tariffs will hit up to $160 billion of consumer goods entering the U.S.

Any Form of a Deal or Agreement Will Benefit Investors and Consumers

Tariffs were initially implemented to reduce the trade deficit with China and protect American industries. However, the deficit has increased even with tariffs, and U.S. manufacturing output has dropped to its lowest level in ten years. China has stopped buying some American products, with the agricultural industry being the hardest hit.

Even if a limited scope deal is signed this week, investors should see a boost in stocks and market confidence. If incoming tariff increases can be delayed or avoided, then consumers will see less impact at the checkout.

Officials will meet later this afternoon, with a statement expected from the White House before the end of the day.

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