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Team Trump goes to China to avert a trade war
by Matt Egan and Danielle Wiener-Bronner @CNNMoneyInvest
April 29, 2018: 7:47 AM ET
Trump's new top economic adviser hates tariffs
Trump team heads to Asia: A trade war with China was once unthinkable. Now, that nightmare scenario is sitting atop Wall Street's worry list.
The fear is that confrontation between the world's two biggest economies derails trade, destabilizing the global economy.
That's why it's an unmistakable positive that President Donald Trump is sending top economic officials to China this week for trade negotiations. Talks are certainly better than tariffs.
The hope is that Team Trump will leave Beijing with the framework for a trade agreement that both sides can live with. Not only would that avoid the escalation that investors fear, but it could put a stop to the unfair trade practices that cost American businesses billions.
"I think we've got a very good chance of making a deal," Trump said last week.
One potential problem: Trump's team must present a united front. That could be a challenge because the delegation is expected to include a mix of trade hawks and staunch advocates of free trade.
Trump's aggressive stance on trade will be embodied by Robert Lighthizer, the US Trade Representative. He led the investigation into China's alleged theft of intellectual property such as software and patents.
On the other hand, Larry Kudlow, Trump's top economic adviser, is a vocal defender of free trade. Before joining the White House, Kudlow co-wrote a CNBC editorial knocking Trump's steel and aluminum tariffs as "tax hikes" that risk millions of American jobs. Treasury Secretary Steven Mnuchin is also an advocate for free trade, although he has sharply criticized China's trade practices.
"This sets up a bizarre situation where the US team may spend most of the talks negotiating among themselves," Chris Krueger, managing director of the Cowen Washington Research Group, wrote to clients. He added that it's "hard to picture" more "unique" Trump officials.
Trump officials have downplayed their differences -- and noted the positives of their diverse backgrounds.
"Tariffs are not my favorite tool, but I think they are a necessary tool as we move towards fair and freer trade," Kudlow told his former network CNBC last week.
Kevin Hassett, chairman of the White House Council of Economic Advisors, told reporters on Friday that Trump "really values diversity of opinions." While key members of the economic team have differed on various policies in the past, Hassett noted that there was unanimous support for the investigation into China's trade practices.
The stakes for the trip to Beijing are massive. The talks may represent the best chance to avoid a trade war between China and the United States.
"An escalation of the trade dispute," Ameriprise senior economist Russell Price wrote to clients, "could be the greatest singular threat to the near-term economic outlook."
http://money.cnn.com/2018/04/29/investing/stocks-week-ahead-china-trump-trade/index.html
by Matt Egan and Danielle Wiener-Bronner @CNNMoneyInvest
April 29, 2018: 7:47 AM ET
Trump's new top economic adviser hates tariffs
Trump team heads to Asia: A trade war with China was once unthinkable. Now, that nightmare scenario is sitting atop Wall Street's worry list.
The fear is that confrontation between the world's two biggest economies derails trade, destabilizing the global economy.
That's why it's an unmistakable positive that President Donald Trump is sending top economic officials to China this week for trade negotiations. Talks are certainly better than tariffs.
The hope is that Team Trump will leave Beijing with the framework for a trade agreement that both sides can live with. Not only would that avoid the escalation that investors fear, but it could put a stop to the unfair trade practices that cost American businesses billions.
"I think we've got a very good chance of making a deal," Trump said last week.
One potential problem: Trump's team must present a united front. That could be a challenge because the delegation is expected to include a mix of trade hawks and staunch advocates of free trade.
Trump's aggressive stance on trade will be embodied by Robert Lighthizer, the US Trade Representative. He led the investigation into China's alleged theft of intellectual property such as software and patents.
On the other hand, Larry Kudlow, Trump's top economic adviser, is a vocal defender of free trade. Before joining the White House, Kudlow co-wrote a CNBC editorial knocking Trump's steel and aluminum tariffs as "tax hikes" that risk millions of American jobs. Treasury Secretary Steven Mnuchin is also an advocate for free trade, although he has sharply criticized China's trade practices.
"This sets up a bizarre situation where the US team may spend most of the talks negotiating among themselves," Chris Krueger, managing director of the Cowen Washington Research Group, wrote to clients. He added that it's "hard to picture" more "unique" Trump officials.
Trump officials have downplayed their differences -- and noted the positives of their diverse backgrounds.
"Tariffs are not my favorite tool, but I think they are a necessary tool as we move towards fair and freer trade," Kudlow told his former network CNBC last week.
Kevin Hassett, chairman of the White House Council of Economic Advisors, told reporters on Friday that Trump "really values diversity of opinions." While key members of the economic team have differed on various policies in the past, Hassett noted that there was unanimous support for the investigation into China's trade practices.
The stakes for the trip to Beijing are massive. The talks may represent the best chance to avoid a trade war between China and the United States.
"An escalation of the trade dispute," Ameriprise senior economist Russell Price wrote to clients, "could be the greatest singular threat to the near-term economic outlook."
http://money.cnn.com/2018/04/29/investing/stocks-week-ahead-china-trump-trade/index.html
