US-China trade deal could come as world’s two biggest economies slow, T. Rowe Price says
- Tensions between the world’s two biggest economies are likely to linger, T. Rowe Price economist Nikolaj Schmidt says
- Growth is slowing, but the US is likely to miss a recession, Schmidt says
Slowing growth in the United States and China are likely to push the world’s two biggest economies to reach a deal on trade in the coming months, but tensions are likely to linger as there are “much deeper” issues between the two countries, according to T. Rowe Price economist Nikolaj Schmidt.
For the moment, Schmidt said that he does not expect the trade situation to escalate further between the US and China, particularly as the US election cycle moves closer and the US and global economy are showing signs of slowing.
“We are seeing indications we will see increased policy support out of China, which probably also suggests that growth in China has probably triggered – not alarm bells – but some of the red flags that [Beijing] should provide a little more support to ensure we have stable employment growth,” according to Schmidt, chief international economist in T. Rowe Price’s fixed income division. “Those are the points we need to get to before we get anything that starts to look like an agreement. On both sides, I think there is a bit of pain. I think that is a prerequisite to us getting a deal.”
The US-China trade war has raged for more than a year, with US President Donald Trump placing tariffs on about US$380 billion of Chinese imports and threatening to put tariffs on another US$160 billion of Chinese-made goods in December. China has responded with its own retaliatory tariffs as Trump tries to force Beijing to change decades of trade and industrial policy.