Wall Street’s initial optimism over the perceived thaw in U. S.-China trade tensions was tempered by discrepancies regarding exactly what the two leaders had agreed upon.
The stock market surged Monday, following a weekend meeting between President Donald Trump and his Chinese counterpart, Xi Jinping, when the leaders of the world’s two largest economies nominally agreed on a ceasefire of sorts in the escalating trade war.
“This is the first time that we have a commitment from them that this will be a real agreement,” Treasury Secretary Steven Mnuchin said in a Monday interview with CNBC’s Squawk Box .
On Twitter, Trump also said China agreed to cut tariffs on American-made cars shipped into China. Pre-market activity showed a jump in the shares of U. S. automakers and equipment manufacturers like Caterpillar, which stand to benefit if Trump’s claims of an “incredible deal” with China come to fruition.
Wall Street’s optimism, though, was tempered by discrepancies coming from Washington, D. C. and Beijing regarding exactly what the two leaders had agreed to during their dinner together at the G-20 summit in Argentina, and a new survey of business leaders shows that trade tensions look to be a growing problem for the economy in 2019.
“Trade is now the most important issue to markets,” said Dave Carter, chief investment officer at Lenox Wealth Advisors. “The result of the G-20 meeting was probably the best realistic outcome [but] it was just a pause, not a long term solution. The negotiations need to continue.”
The U. S. said it will suspend additional tariffs on Chinese imports for 90 days to allow trade representatives from the two countries to work out a compromise.
