US-China: Sustained de-escalation in trade tensions? - Citibank

Analysts at Citibank point out that the US Treasury Secretary Mnuchin now sees the US–China 90-day truce announced over the weekend culminating in a “real agreement.”

Key Quotes

“Trump economic advisor Kudlow believes “China’s commitments will start immediately with US companies (doing business in China) set to get majority ownership of companies for the first time”.

“Earlier, President Trump tweets that China has agreed to “reduce and remove” tariffs on imported American-made cars (currently 40%) and that Robert Lighthizer will lead trade talks from the US side instead of the more China hawkish Peter Navarro.”

“US – China 90-day ceasefire announced over the weekend sees skepticism all around. But indications are that this may not only support risk appetite and trade- and China-sensitive currencies (including AUD, NZD) in the short term, but that the thaw may result in more sustained progress towards a comprehensive agreement over the next 90 days (a more medium-term USD negative).”