by Ivan Martchev
April 29, 2025
It is comical to see how the Chinese twice last week had to deny that they are having any trade talks with the U.S. via their official foreign ministry spokesperson, while President Trump kept repeating that they are talking with the Chinese. Then, a delegation of senior members of the Chinese Ministry of Finance was spotted entering the U.S. Treasury Department early Thursday morning with the bizarre explanation from China along the lines of “they are talking but not discussing trade.” It is hard to believe that the U.S. main trade negotiator, Treasury Secretary Scott Bessent, who is in that building overseeing the biggest shift in U.S. trade policy in decades, is not addressing the obvious issue of trade with the Chinese, even if they are only messengers, taking the message to Beijing. If that is not negotiating, I don’t know what is.
The positive vibes from the trade standoff are the major reason why we saw a surge in stocks last week. There is news that the South Koreans are very advanced in their trade deals, and when other main trade partners begin to get the same type of news in the headlines, the stock market will like it even more.
I certainly don’t believe all this drama will be wrapped up quickly, but the more big trade partners begin to make deals, the more pressure is on China to do the same thing. After all, most of the high tariffs with China are still in force, other than for electronics, and such high tariff rates are not sustainable.
The longer those tariffs stay at such high levels, the more likely it is that it will be reflected in U.S. and Chinese economic data. The stock market will not like seeing any deteriorating economic numbers in the U.S. in the next three months, but if we have more trade deals and a likely lowering of tariffs on China in order to de-escalate the situation, I am sure the stock market would love it. Any major trade progress in the short term that’s not accompanied by weakening economic numbers is likely to fuel explosive gains.
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