And China Push Pause on Trade War

And China Push Pause on Trade War

The drop in trade activity was steeper than economists had predicted as the ongoing trade war with the US continues to hit China's economy.

As part of phase one, China would buy between $40 billion and $50 billion in US agricultural products. In May, U.S. officials accused China of walking away from a sweeping agreement that was almost finished over a refusal to make changes to Chinese laws that would have ensured its enforceability. Farmers have suffered during the trade dispute, as many struggled to sell crops with China unavailable as a buyer.

Gold futures are trading higher on Monday shortly before the regular session opening after reversing earlier weakness.

Left on the table, though, was Trump's biggest economic threat yet and the darkest cloud in the outlook: import taxes on all remaining Chinese shipments due to start December 15 that would make a range of popular consumer products more expensive. On America's part, Trump has agreed to suspend the implementation of another round of tariffs on $250 billion of Chinese goods that had been scheduled to go into effect on October 15.

U.S. President Donald Trump said on Friday that China and the United States had reached the first phase of a trade deal that covered agriculture, currency and some aspects of intellectual property protections, and would ease the reciprocal trade restrictions that the world's two largest economies have been imposing for 15 months.

So far, the two sides have imposed punitive tariffs covering more than $360 billion worth of goods in two-way trade.

Secondarily, the limited deal does next to nothing to wipe out the uncertainty that has gripped Corporate America during the trade tussle, which has morphed into many companies delaying capital expenditures.

He says $16 billion was the largest amount China had ever purchased previously.

So, why bother pulling the trigger on expensive new equipment?

That might have been why the Chinese didn't talk up the prospects of this deal right from the get-go.

Treasury Secretary Steven Mnuchin told CNBC's "Squawk Box" on Monday that while both sides made "substantial progress" last week, the agreement is still "subject to documentation". That didn't come to pass, however. "We made a lot of progress and our expectation is this will be concluded and signed by Chile".

If Trump wants to unleash that yearend rally in stocks that boosts his poll numbers, he would be wise to get the details of phase one of his trade deal out there into the markets and strongly signal that reaching phase three isn't a pipe-dream during a hypothetical second term.

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