US: Trade conflict to result in lot of uncertainty – ABN AMRO
|Han de Jong, chief economist at ABN AMRO, notes that the US preliminary PMIs reflecting business confidence showed continued softening with all series moving towards the 50 level and the question here is to what extent the survey was affected by the unexpected reappearance and tone of the US China trade conflict.
Key Quotes
“It is impossible to say with any certainty what will happen in the trade conflict. The rhetoric has become very hostile. We still think that could be a normal pattern in tough negotiations. And we still think both sides have an incentive to do a deal before too long. President Trump wants to be re-elected next year. He needs a deal to show that he is a ‘deal maker’ as he claims.”
“In addition, a complete breakdown of talks and stepping up of protectionists measures will harm the economy and the stock market. That will not be favourable to Trump’s re-election chances. A surge in protectionist measures will not be in the interest of the leaders in Beijing either as a further slowdown of the economy may cause them economic, social and political problems. So our main scenario remains that a deal will, eventually, be done.”
“There is a lot of uncertainty, however. It can be argued that the trade conflict is just a small element in the quest for global political, economic and technological leadership. In such a battle, doing a trade deal is not that important. Political leaders who consider themselves involved in such a battle for global leadership will, most likely, be willing to accept inflicting pain on their own people as long as they think they are inflicting more pain on the other party.”
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.