Daily Management Review

Trump Says US Not Ready For A Trade Pact With China, Markets Hurt


United States President Donald Trump is not yet ready to get into a trade agreement with China, he said on Friday, and even questioned the justification of a September round of trade talks. Those comments spooked the financial markets that now fear that a the trade way between the two largest economies of the world is not likely to end anytime soon.
There was also confusion among American business following a comment by Trump about the Chinese tech giant Huawei, Trump said that he would do no business with Huawei. Later however, a White House official clarified that Trump was talking about the ban imposed on government department of over doing business with the Chinese firm and that he was not talking about the requests sent to the Trump administration by some American companies for a waiver to do business with Huawei.
"We're talking with China. We're not ready to make a deal - but we'll see what happens," Trump told reporters at the White House before departing for fundraisers on Long Island, New York. "China wants to do something, but I'm not ready to do anything yet. Twenty-five years of abuse - I'm not ready so fast, so we'll see how that works out," he said.
There has been further deterioration in the already strained relations between the two countries ever since Trump announced on August 1 about the latest round of tariffs to be imposed on Chinese goods worth $300 billion. The new round of tariffs is set to be introduced from September 1. As a retaliation, China stopped importing American agricultural products.
And this week, the US also officially declared China to be a manipulator of currency after the Chinese government took no steps to stop a free fall of the Chinese yuan below the psychological 7 yuan a dollar rate.
US market ended the week on Friday in the red after a week of constant ups and downs. There was a fall of 90.75 points or 0.34% while there was a loss of 19.22 points or 0.66% in the S&P 500.
"It has been a very volatile week," said Elwin de Groot, Rabobank's head of macro strategy. "Until recently, the markets' view was that this trade war will be resolved, but clearly now the thinking is that maybe this is not the case and it could be accelerating from here."
Talking about the current value of the Chinese yuan, the International Monetary Fund said on Friday that its value currently was more or less in line with the fundamentals of the Chinese economy. However, an IMF official also said that China was being encouraged to adopt a flexible exchange rate with less intervention because of the trade dispute.
Trump supported the currency related accusations made against China by his administration and said that the fact that the fall of the yuan was stopped later by China clearly shows proof of manipulation and this act was offsetting the intended impact of the US tariffs on China

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