For the first time in months, there is some positive movement in US-China trade talks. On Monday, China has expressed the desire to reach a “calm” end to the ongoing trade war, and President Trump is optimistic a deal will get done.
This comes after last Friday’s round of tariffs on $550 billion in Chinese goods implemented by the United States, seemingly causing Asian markets to decline and China’s currency to hit an 11 year low. These tariffs were a response to last week’s $75 billion tariff on US good made by China.
President Trump told The Wall Street Journal on Monday that officials from China have contacted US officials with interest of coming back to the table, something the president calls a “very positive development.” This news comes on the back of Trump threatening to declare a state of emergency that would cause American corporations to freeze their relationships with China.
Vice Premier Liu He, China’s top trade negotiator, told the state-run newspapers that “China is willing to resolve its trade dispute with the United States through calm negotiations and resolutely opposes the escalation of the conflict.” He continued echoing these sentiments at a Chinese technology conference, “We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world.”
As to why the yuan dropped to an 11 year low is murky. Granted recent tariffs may contribute, however, the drop happened only weeks after the US treasury department designated China a “currency manipulator.” The department says it is working with the International Monetary Fund to remedy the “unfair competitive advantage created by China’s latest actions.”
The dropping of the yuan would make it easier for local exporters to sell their goods internationally at a lower price, however, China claims it does not “engage in competitive devaluation.”
Asian markets are not the only ones struggling because of the ongoing trade war. After Friday’s tariff announcement by President Trump, has caused the Dow Jones to drop 600 points and the S&P 500 to record its fourth consecutive weekly loss.
