World shares mixed after Trump says no plans for Xi meeting

Hugh Fox
February 11, 2019

President Donald Trump said he won't meet Chinese President Xi Jinping before a March 1 deadline to avert higher USA tariffs on Chinese goods, intensifying fears the two won't strike a deal before the end of a 90-day truce.

CNBC reported Thursday that a senior administration official said the two leaders are "highly unlikely" to meet before a March 1 deadline, after which the Trump administration is scheduled to more than double tariff rates on $200 billion worth of Chinese products.

Selling was triggered after White House economic advisor Larry Kudlow said on Fox on Thursday that "there is a pretty sizeable distance to go" to achieve a deal.

Trump's announcement on Thursday was a reversal for the President, who said last week that he planned to meet Xi to resolve any "final issues" before the trade deal.

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The news prompted a sharp selloff in US stocks, dashing the optimism that had been building that the countries were progressing towards a deal before tariffs on Chinese imports rise to 25 percent after the March 1 deadline.

Asked during an event in the Oval Office whether there would be a meeting before the deadline, Trump said: "No".

Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer are leading a group of administration officials headed to Beijing next week as part of the trade talks. A source familiar with the talks expressed skepticism about that report to Reuters, and Lighthizer said last week that tariffs had not been a subject of the talks.

He does anticipate the USA and China could reach a deal later this year to remove the tariffs, with the upcoming election cycle playing a role in the timing. With all the ingredients for another round of a stock market selloffs in place, equity bears are seen jumping back into the scene if US-China trade talks do take a turn for the worst. Rather, it was due to the amount of work that still needed to be done by negotiators.

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The Journal also said the two sides have not even drafted an accord specifying the matters they agree and disagree on. If a deal is not struck before then, USA tariffs on Chinese goods will increase, barring some sort of extension.

When asked whether there would be a meeting in the next month or so, Trump said: "Not yet". According to a China expert at the American Enterprise Institute Derek Scissors, the delay in the meeting does not suggest a deal breaker. That marks the end of a 90-day tariffs truce mooted after Trump and Xi met in December.

The March crude contract was up seven cents at US$52.71 per barrel and the March natural gas contract was up 2.6 cents at US$2.58 per mmBTU.

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