Uptick in markets likely after ‘phase one’ trade deal, but US-China relations expected to turn ugly again after US presidential election
- No matter which candidate for president wins in November, the conflicts with China will flare again, US analysts say
- American economists make predictions for 2020, including ‘a 5 to 6 per cent uptick of the S&P 500’
A “phase one” trade deal between the United States and China will bring a temporary upswing to the markets next year but will not stop the long-term conflicts between the two countries no matter who wins the US presidential election, American economists said.
“We will have a ceasefire of the trade war in the election year as the Trump administration has a strong incentive to do some kind of a deal,” Ethan Harris, head of Global Economics at Bank of America, said in New York on Tuesday.
“China is hurting as well,” he said. “A skinny deal will offer a bit of a win-win for both sides.”
But, he said: “It is important to recognise the phase-one trade agreement is not the be all and end all deal. We worry about re-escalation in trade disputes post-election.”
US President Donald Trump and his Chinese counterpart, Xi Jinping, would make a “noisy” ceasefire so as not to scare the markets, Harris predicted.