“Trade war” on hiatus or is it an illusion?

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On the sidelines of the G20 over the weekend yet there was interesting and important for the world economy event: the US and China announced a moratorium on the increase of mutual import duties for a period of 90 days. The agreement shall enter into force on 1 January 2019 and will last until early April. This time, in theory, should be used for the formation and conclusion of the trading agreement between the parties. If three months of progress here will not happen in April, States will impose new import duties in respect of goods of Chinese origin, and “trade war” will enter a new and very aggressive phase.
Now, while the announced pause in the barrage of trade measures, additional import duties for China in the United States are frozen at the level of 10%. Recall that Washington threatened to impose 25% import duty.
The scenarios are two. The first is fast and dynamic negotiation process and reaching agreements. In this case, the United States will push China to achieve the best conditions for itself. It is already clear that the pause in the trade war achieved through the commitment of China to buy from the States a large volume production sector of industrial production, commodities, agriculture and energy. This is actually the same trade lobby, but without a strict time frame.
The second scenario is the absence of points of contact and the absence of an agreement by April. This means that for three months, China has actively prostimulirujte its economy and domestic demand, will support banks and exporters and the middle of spring the world will see a wave of trading aggression from the United States. It may be involved and other countries in addition to Asian countries. It’s a big risk to the energy market and capital market in General.
In General, Washington is using the same tactics, the only question in its filing and registration. In other words, a trade war will not go away, it just changed the format.
A couple of days the capital markets in the world will be in a state of euphoria, and then it will come to naught because the investors will see that nothing has changed, and will not be changed. Brent may take in the region of $63 per barrel, but from there after the reduction of the degree of market enthusiasm will go back to the corridor $60,00-61,50. Gold stabiliziruemost in the range of $1220-$1240 per Troy ounce. The Euro/dollar in the short term protorguetsya in the range of 1.1350-1,1385, and then back to the movement to around 1.1400.
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Anna Bodrova,
Senior analyst,
Alpari