Markets now hoping tariffs don’t change on March 1, JP Morgan says


Within a few months, the discussion on trade focused more on U.S. complaints about how China treats foreign companies, including longstanding economic structural issues and intellectual property rights.

Trump’s latest agreement was not to raise tariffs as planned at the beginning of 2019 if both sides could reach a resolution on “forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture” within 90 days, according to the White House.

But the latest media reports about ongoing discussions between both sides in Beijing this week suggest years-long differences will take more than a few months to resolve.

Enforcement is also a major question for China, which has yet to live up to many promises it made nearly two decades ago when it joined the World Trade Organization.

“While it is encouraging that the U.S. seems to be leaning toward giving policymakers more time to reach a settlement, the U.S. delegation appears to be holding firm on its view that greater Chinese purchases of U.S. goods and protection for U.S. intellectual property are meaningless without mechanisms to ensure China lives up to its promises,” Anderson said. “China, understandably wary of being tied to too strict of a timeline, has resisted such demands in the past.”

“This is not to say a deal is impossible, but the grand bargain the U.S. administration has been angling for remains a long way off. Smaller deals on specific aspects of the larger trading relationship, rather than one deal to resolve all complaints, are likely throughout the year,” she added. “Markets may have to accept trade headlines are here to stay.”