Trump to meet top trade advisers on Thursday to discuss Dec. 15 tariffs - Reuters sources


  • Sino/US tariff guillotine is still hanging over markets. 
  • Trump is likely to meet with top trade advisers on Thursday to discuss Dec. 15 tariffs.

Reuters sources say that US President Donald Trump is likely to meet with top trade advisers on Thursday to discuss Dec. 15 tariffs on Chinese goods.

The rumours are circulating, yet, it is not as if Trump would not be meeting with colleagues to discuss this – this is a massive chess move that is being considered over tariffs on nearly $150 billion worth of Made in China goods that will rise.

Implications for the US and China on tariff hikes

Trump, the author of "Art of the Deal', knows only too well that should he postpone the tariffs as a sign of goodwill, China will come out victorious in this current trade battle. On the other hand, if he does not, not only will the markets come crashing down on his head at the turn of the year when he needs the US electorate on his side leading into the 2020 Presidential election campaigns, there could be other serious negative ramifications for both sides of the trade spat.

For China, it means sacrificing towns as business relocates operations overseas and probably a much weaker Yuan which could, in turn, encourage capital flight. As for the US, economic data suggests that the trade conflict is hitting America hard, especially in manufacturing and trade. On the other hand, when goods made in China are too high and importers seek goods from other nations instead of China, there is no benefit for the US economy in the taxes otherwise collected from tariffs, (that the Treasury recoups in taxes from tariffs, money that is then available, for example, to be rebated to farmers to compensate for the hit to trade), and thus the economy incurs a deadweight cost that directly hits GDP growth. Indeed, a full-blown currency war will be in the making and that's not good news for US dollar bulls nor the Federal Reserve. 

In the best-case scenario for the market, these tariffs will be postponed but at the risk of rising again at some stage down the line in the trade war, if not kept on hold to be used if President Trump gets reelected.

For now, the tariff guillotine is still hanging over markets. 

FX implications

The Aussie and yen, as well as the US dollar and yuan, are the key player in this theme. However, AUD/JPY is the FX market's risk barometer and one to watch/trade as things develop:

 

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD slips back to low ground amid coronavirus concerns

EUR/USD is trading closer to 1.08 coronavirus headlines are weighing heavily on the market. The US dollar remains bid despite falling US yields.  Earlier, the German IFO Business Climate beat with 96.1.

EUR/USD News

GBP/USD dips below 1.29 on USD strength

GBP/USD has dipped below 1.29 as the dollar gains ground amid coronavirus headlines. The EU and the UK prepare for formal post-Brexit due to talks kicking off next week. 

GBP/USD News

Crypto market consolidates prices while crushing traders' emotions

Top 3 prices remain in range and contradict indicators pointing south. Mild "fear" sentiment is inconsistent with prices in the upper range of the upward movement. XRP may be the surprise of the week and bounce upwards for technical reasons.

Read more

Gold hits fresh multi-year tops, eyeing $1700 mark

Gold continues scaling higher amid a fresh wave of the global risk-aversion trade. Heightened fears about the economic impact of the deadly coronavirus rattled investors. Absent relevant economic data is unlikely to hinder the ongoing strong move up.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex MAJORS

Cryptocurrencies

Signatures