US and China plan high level trade talks amid fears tariff war could wipe $1 trillion off economy

Donald Trump   Xi JinpingPresident Donald Trump and China's President Xi Jinping meet in Beijing in November.REUTERS/Jonathan Ernst

  • US and Chinese officials are set to meet for high level talks with hopes of securing a deal at the end of April after a difficult patch of negotiating.
  • Tensions were raised after the US Chamber of Commerce indicated that should tariffs increase, $1 trillion could be wiped off the economy in the next decade.
  • US futures are trading up ahead of the Federal Reserve's policy decision Wednesday after a mixed day of trading in Asia.

Hopes for a US-China trade war deal have been boosted by confirmation that high level talks will continue despite recent difficulties.

The ongoing dispute has been shaky in recent months after President Trump's abrupt decision to re-engage North Korea on denuclearization talks and allegations that China was pushing back against key US trade demands.

However, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to visit Beijing next week in a bid to find agreement in a meeting with Chinese Vice Premier Liu He, with the aim of securing a deal by the end of April, according to the Wall Street Journal.

"The deadly duo of Lighthizer and Mnuchin are heading to China next week, with the aim of sealing a deal by the end of the month. But there is still a large chasm between the two sides," said Neil Wilson, chief market analyst at Markets.com.

Key sticking points in the negotiations include the speed at which tariffs would be lifted in the event of a deal, the ability of US companies to operate freely in China, Intellectual Property rights, and restrictions on cross border data flow.

Market tensions are high following research which indicated the US economy would take a $1 trillion hit if tariffs were to increase, according to a report from Rhodium Group Friday. The research found that increased tariffs would batter US GDP, as well as hurting import and export costs, raising prices for US consumers as American goods become less competitive.

"In the five years after tariffs are implemented, average annual US GDP would fall $64 billion to $91 billion," according to the report. It also noted that higher import tariffs "disproportionately hit US manufacturers who rely on lower-cost inputs shipped from China."

US futures are trading up ahead of the Federal Reserve's policy decision Wednesday after a mixed day of trading in Asia with US and Chinese stocks closing down or barely up amid continued uncertainty.

{{}}
Add Comment()
Comments ()
X
Sort By:
Be the first one to comment.
We have sent you a verification email. This comment will be published once verification is done.