Trade tensions continue between the U.S and China. On Friday, both sides are expected to talk trade after China hinted that it would not retaliate against the new tariffs set to go into effect in coming days.
“We’ve been down this road before. I think there are still so many issues that haven't been resolved, the subsidies from China to their state-owned companies, their theft of U.S. intellectual property rights, on and on and on. So talking is good, details are better,” AGF’s U.S. Policy Strategist Greg Valliere told Yahoo Finance’s On the Move.
As tariffs set to go into effect September 1, the growing list on Chinese goods consist of video games, cosmetics and more. It’s good that it appears that China is backing off and things aren’t escalating, said Valliere.
“Everyone, not just the U.S., was unnerved by the selloff last week, but it was a wake up call that this has to be curtailed a bit,” he said referring to the market reaction to the trade war.
“I think the Chinese worry about their economy and the impact on their markets. So I do see a little truce but again there are so many details to iron out,” Valliere explained.
Valliere said there are two major impediments to a successful trade deal.
The first is “there's a lot of hawks in this town,” namely Peter Navarro, the director of trade and manufacturing policy, who “is very prickly. He’s difficult to deal with,” said Valliere. Then you've got Democrats, like Senator “Chuck Schumer, who want to crack down on China. So, a lot of Democrats want to be aggressive as well,” he said, adding that even if a Democrat is in the White House, like Senator Bernie Sanders or Senator Elizabeth Warren, “there’s not a lot of difference on trade issues.”
The second, which may be even more important, “is the threat that China may try to crush the insurrection in Hong Kong. If they do, that makes getting a deal a lot tougher,” he said.
“I think the consensus in this town is that we got a ways to go but Donald Trump will pull out all the stops to get re-elected and by the winter, we’ll get a deal,” said Valliere. “I just think we got a few months to go.”
Ralston Ramsay is a producer for Yahoo Finance’s On the Move.