We’ve extensively covered all the news going down between China and the U.S. A trade war between the two economic superpowers is not a good idea for anyone. China knows that, as does the United States.
President Trump, once again, seemed to apply just enough pressure to get the outcome he desired. His first victory came over North Korea, who agreed to end the Korean War and step across the DMZ at the behest of Trump’s critics who warned his tactics would lead to a nuclear war.
Now, China also appears to be bowing to pressure from President Trump, agreeing not only to end threats of a trade war, but also to purchase “massive amounts” of agricultural products from U.S. farms.
China also agreed to sit down and create a new deal promising to address the massive trade deficit between them and the U.S., a problem President Trump has railed against since his campaign.
According to U.S. Treasury Secretary Steve Mnuchin, this increase in agricultural products should total an additional 40%, which is amazing news for farmers who were worried a trade war would severely hurt their income.
Stocks and Oil Prices
When news first broke that China and the U.S. were soon to be embroiled in a fight, it frightened a lot of investors. Stocks fell sharply after months of historic growth. Now that news of the trade war being behind them and new deals are in place, stocks rose early Monday morning, as did the price of oil.
For the first time since 2014, the price of oil hit the $80 per barrel mark.
OPEC and Russia agreed to cut supply, as well as promised economic sanctions on major oil producer Iran that has many experts believing we’ll see oil prices cross the $100 mark this summer, but now that the trade war talk is cooling, moods are shifting. Some of the pressure on the market is now going away.
“Both sides plan to work on implementing agriculture and energy purchases and to continue to negotiate on manufacturing and service trade, bilateral investment and intellectual property protection in coming months,” said U.S. bank Morgan Stanley.
Now that the U.S. and China are on the same page economically, it can only mean good things for both countries. Trump certainly has a way with getting things done, even if his methods make everyone else nervous.