Ahead of Trump-Xi summit, China seen as having more to lose from prolonged trade war
- Analysts say a temporary deal is likely at the Trump-Xi summit, but a more permanent solution could take a bit longer
- But US would also lose if trade war leads to economic downturn
It’s said that there are no winners in a trade war. But as US President Donald Trump and Chinese President Xi Jinping prepare to meet in Buenos Aires this weekend, the consensus is that China will sit down in a weaker economic position.
However, most analysts agree that neither side has much to gain from prolonging the conflict.
“China’s in a much weaker position, but that doesn’t mean the US is in a strong position,” said Richard Duncan, an independent economist and publisher of the video-newsletter Macro Watch.
“Its economy could also be thrown into a very severe crisis through a [prolonged] trade war with China, while China’s economy could completely implode.”
Expectations are measured as to whether a deal can be struck to end the trade war, which is set to escalate in January, when US tariffs on Chinese goods are expected to increase from 10 per cent to 25 per cent in the absence of a “ceasefire” agreement between Trump and Xi.
“It’s hard to reach an agreement at the G20 summit,” said Ding Shuang, chief Greater China economist at Standard Chartered Bank. “The most likely scenario is that both agree to have further talks, so that the 25 per cent tariffs on US$200 billion of Chinese merchandise can be postponed and the tension can be de-escalated.”