Stocks took a hit on Tuesday, after President Trump said it may take until after the 2020 U.S. elections to complete a trade deal with China.
Stocks slumped after Trump told a London news conference where he is attending a NATO meeting that he had “no deadline” when it comes to concluding the two year old U.S.-China trade talks.
U.S. Commerce Secretary Wilbur Ross reinforced the message when he told CNBC that Trump is “serious” when he said that trade talks with China may last past the 2020 elections.
“We have seen this movie many times before however where the President throws out remarks during trade talks that in retrospect have just been a negotiating tactic, especially when he starts off by saying China wants a deal more than he does,” said Chris Rupkey, chief economist with MUFG.
“We still think a phase one deal is coming, although it is likely to go down to the final deadline of December 15. Markets are trapped by the changing news, but this is exactly like a reality TV show where the outcome continues to be drawn out to the bitter end. The President can’t afford for stocks to crater that much is clear with an election hanging in the balance less than a year away.”
Stocks with exposure to the trade war led the market lower. [For example] Caterpillar -2.03% and Apple -1.78%.
MacDailyNews Take: Negotiations by definition are a back-and-forth, give-and-take situation. It seems like a long, meandering, up-and-down trip, but eventually we’ll all arrive somewhere – hopefully someplace nicer than before!