Wariness over the strength of an agreement hammered out between the U.S. and China last week was growing on Monday after a report that Beijing will insist on more talks with the U.S. before signing any such deal.
Meanwhile, no White House decision has been made yet on planned on a new 15% tariff set to go into effect on Dec. 15 on about $160 billion in annual Chinese imports. U.S. Treasury Secretary Steven Mnuchin told reporters on Monday that if a deal isn’t in place by December, those tariffs will go ahead. But he also said, “I expect we will have a deal."
Earlier citing sources, Bloomberg reported Monday that China wants further discussions as soon as the end of October, to smooth out details of the so-called “Phase 1” trade deal announced by President Donald Trump that will delay a tariff hike, boost Chinese agricultural purchases and address foreign currency levels. The agreement was not set out in writing, and only in principle.
One of the sources told Bloomberg that Beijing could send a delegation led by top negotiator Vice Premier Liu He to put the final touches on a written deal in time for a signing at next month’s Asia-Pacific Economic Cooperation presidents meeting in Chile. And another source said China wants the planned tariffs for December by the U.S. to be scrapped as well as a tariff hike meant to go through this week.
“’Phase two’ could be discussed in the coming weeks and months, suggesting December tariffs are likely to be suspended as well, but we do not expect a grand agreement or a rollback of existing tariffs this year. Both sides remain far apart on many thornier issues and last week’s agreement really only reinforced actions China has already been taking,” said Esty Dwek, head of global market strategy for the Dynamic Solutions unit of Natixis Investment Managers
The news initially hit U.S. stock futures hard, though markets have regained some composure. Dow Jones Industrial Average futures YM00, -0.26% off 64 points, or 0.2%, to 26,711, S&P 500 futures ES00, -0.26% off 7.05 points, or 0.2%, to 2,964 and Nasdaq-100 futures NQ00, -0.29% siding 21.25, or 0.3%, to 7,838. U.S. CLX19, -2.23% and European benchmark Brent crude prices BRNZ19, -2.18% were down roughly 2% each.
The Dow industrials DJIA, +1.21% rose 319.92 points, or 1.2%, to 26,816.59 on Friday, closing off the days highs.
Even ahead of the report that China wants more talks, there were indications from newspapers in the country advising some caution over negotiations with the U.S. The China-owned English newspaper China Daily said in an article Monday while the forward steps in trade talks were “encouraging,” a “partial deal, if inked doesn’t mean the trade row has been settled once and for all.”
And Hu Xijin, the influential editor-in-chief of the state-controlled Global Times, tweeted over the weekend that China was tempering its excitement over any potential deal: