US Pres. Trump can’t force China to yield on trade like Mexico – Global Times
|China’s Global Times repeated its habit of firing warning shots at the United States (US) President Donald Trump during its piece on early Thursday morning in Asia. The story says that it is impossible that the US can strike a trade deal with China by forcing Beijing to make big compromises, as the US did to Mexico when it came to the US-Mexico-Canada Agreement (USMCA).
Key quotes
Mexico's economy is highly dependent on the US. Some statistics showed about 80 percent of Mexico's exports went to the US in 2018. This may show why the US can force Mexico to make compromises in trade talks.
The same scenario won't play out in the trade talks between Beijing and Washington
China's exports to the US account for 19 percent of its total exports of goods, far below the 80 percent recorded by Mexico.
More importantly, China has a huge domestic market that can help offset the negative effects of the trade war as some Chinese exporters lose market share in the US. It's very unlikely for Beijing to make compromises in trade talks with the US in the way that Mexico did.
FX implications
While markets are catching a breath during the early Asian session post-Federal Reserve (Fed) decision, no major reaction to the news could be witnessed. Though, the piece shows China’s strong dislike for the US and increases the odds of no phase-one, leading to the US tariffs on China and another trade war. The USD/JPY trades on the back foot around 108.55 by the press time.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.