Trump says China trade deal can wait, triggering stock sell-off

Andrew Cummings
December 4, 2019

A full-blown global trade war is now seen as the biggest threat to world markets.

She went on to explain that because of Trump's focus on the 2020 presidential election and the US' longtime efforts curtail China's economy and associated developments, Trump is unlikely to make more progress on finalizing a trade deal.

Trump on Monday announced tariffs on US steel and aluminum imports from Brazil and Argentina "effective immediately", opening new fronts in his trade war. Outstanding issues in the talks include how to guarantee China's purchases of USA agricultural goods and exactly which duties to roll back, they added.

The U.S. House of Representatives approved a bill that would require Washington to toughen its response to Beijing's crackdown on its Uighur Muslim minority, which investors fear can possibly deteriorate trade ties. China's Ministry of Commerce didn't immediately respond to a fax seeking comment on tariff rollbacks.

Trump said he has "no deadline" for the trade talks, indicating that he does not mind if the negotiations become protracted. "Because otherwise, there's a tendency of the other side to say 'Oh, he needs it for political reasons, so we'll give him a worse deal than we would.' He's not going to play that game". The President said there was no-deadline for the trade deal and a deal would be completed when he was ready. "There is hope, as long as it is based on mutual respect and equal consultations", according to Phoenix TV.

"In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right", Trump told reporters earlier on Tuesday. The offshore yuan reversed declines to gain as much as 0.25%.

China foreign ministry spokeswoman Hua Chunying on Wednesday blasted US lawmakers as "too ignorant, too shameless and too hypocritical".

But Trump's most recent trade actions may leave Chinese officials concerned about whether he would uphold an initial deal.

The yield on benchmark 10-year U.S. Treasuries fell as low as 1.6930% overnight, the sharpest fall since May and was trading at 1.7105% on Wednesday.

It said China was expediting the process for the list because the U.S. House bill would "harm Chinese firms' interests", and that "relevant" U.S. entities would be among the targets.

Trump didn't initiate the bill involving Xinjiang and a law supporting protesters in Hong Kong, and they are separate issues to the trade talks, according to Lu Xiang, an expert in bilateral ties at the state-run Chinese Academy of Social Sciences in Beijing, which is affiliated with the State Council.

Vice Foreign Minister Qin Gang made "stern representations" to William Klein, the US embassy's minister counselor for political affairs, and urged the United States to stop interfering in China's domestic affairs, state TV reported.

-With assistance from Shawn Donnan, Miao Han, Sofia Horta e Costa, Dandan Li and Jordan Fabian.

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