Radford Taylor Partners - US-China Trade Talks Wobble

Earlier this week, US President Donald Trump’s insisted that the US is doing very well in trade talks with China and that China is eager to make a deal that will bring an end to the trade war.

But on Tuesday markets dipped when it was reported that US officials had refused to meet with two of their Chinese counterparts to engage in preparatory talks ahead of a meeting due to take place at the end of this month.

According to sources close to the negotiations, US representative Robert Lighthizer was unwilling to meet with Chinese officials because of a lack of progress on the issue of forced technology transfers.

In December last year, China and the US agreed to a 90-day trade war truce to allow time for negotiations. With the deadline for the truce to expire rapidly approaching, Radford Taylor Partners analysts say investors are particularly sensitive to signs that China and the US may not reach a consensus.

China’s position appears to be weakening. The world’s second-largest economy recently expanded at the slowest pace in 28 years in 2018, and the country can ill afford a drawn-out trade war and any further tariffs.

It appeared that progress was being made when the US announced that China had agreed to purchase significant amounts of products and services from the US in an effort to reduce the massive trade deficit between the two countries, but Radford Taylor Partners analysts say China may not be in a position to offer such assurances. If the country were to commit to purchasing soybeans from the US instead of another country it would be a violation of World Trade Organization regulations.