Navarro says Trump's trade strategy may create market volatility, but will be bullish long term

Release time：2018-09-25
author：Ameya360
source：CNBC
reading：983

Navarro says Trump's trade strategy may create market volatility, but will be bullish long term

Andrew Harrer | Bloomberg | Getty Images

Peter Navarro, director of the National Trade Council

Current U.S. trade policies may be creating volatility in the near term, but will be good for the markets in the long run, Peter Navarro, one of President Donald Trump's top trade advisors, said Monday on CNBC's "Closing Bell."

In the last year, Trump has opened trade battles on multiple fronts, pressing China, Canada, Mexico and the European Union to come to the negotiating table and imposing tariffs on key imports to get them to take action.

"In the absence of President Trump basically having a tough stance on trade, of setting the standard that trade must be free, fair and reciprocal, we would not have countries talking to us in earnest like they're talking to us now," Navarro told CNBC. "And that's the beauty of the Trump trade strategy. Sometimes it creates a little volatility on the stock markets because the president takes, rightly, strong trade positions."

The Dow Jones Industrial Average hit a record high last week, but it has also swooned several times since the spring as Trump announced new tariffs and raised the pressure on other countries.

"If you're a market investor what you should see is a bullish move toward a structural realignment of a global economy," Navarro said.

The blue chip index fell 181 points on Monday after reports over the weekend that trade talks with China were on shaky ground and reports Monday that Trump's deputy attorney general could be on his way out.

Trump's latest round of tariffs on Chinese imported goods kicked into effect on Monday, and China promised to retaliate in an escalating trade conflict that could jeopardize planned talks between the two sides. Over the weekend, The Wall Street Journal reported that Beijing rejected Washington's invitation to restart talks.

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China's Xi is about to deliver a speech that could have major consequences for the trade war
Trade news

China's Xi is about to deliver a speech that could have major consequences for the trade war

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2018-12-18 00:00 reading：1153
US will hold off on raising China tariffs to 25% as Trump and Xi agree to a 90-day trade truce
Trade news

US will hold off on raising China tariffs to 25% as Trump and Xi agree to a 90-day trade truce

Saul Loeb | AFP | Getty ImagesUS President Donald Trump (R) and China's President Xi Jinping (L) along with members of their delegations, hold a dinner meeting at the end of the G20 Leaders' Summit in Buenos Aires, on December 01, 2018. Chinese President Xi Jinping and U.S. President Donald Trump put their bilateral trade war on pause momentarily, striking an agreement to hold off on slapping additional tariffs on each other's goods after January 1, as talks continue between both countries.In a White House readout of a dinner at the G-20 summit in Argentina, Xi and Trump discussed a range of nettlesome issues — among them the trade dispute that has left over $200 billion worth of goods hanging in the balance."President Trump has agreed that on January 1, 2019, he will leave the tariffs on $200 billion worth of product at the 10 percent rate, and not raise it to 25 percent at this time," the statement read. Over the next 90 days, American and Chinese officials will continue to negotiate lingering disagreements on technology transfer, intellectual property and agriculture."Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent," the statement added.Meanwhile, "China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately," the White House said.Xi also plans to designate Fentanyl as a controlled substance, according to the statement. As the U.S. opioid crisis continues to rage, it would suggest that people selling the drug to parties in the U.S. would be subject to stiff penalties in China.The Trump administration had threatened to more than double the tariffs it has already slapped on $250 billion worth of Chinese imports, while Xi's government has put targeted tariffs on $110 billion in U.S. goods. The standoff has raised fears among investors and businesses that the global economy could be dragged down by the dispute between the world's two largest economies.Trump, who made U.S. trade policy a central plank of his platform as a presidential candidate in 2016, wants to address specific gripes with China's trade practices, especially its alleged theft of U.S. intellectual property.Trump touted the G-20 meeting thus far as a "great success" in a pair of tweets Saturday. But he postponed a press conference, which was scheduled to follow a summit meeting, until after the funeral of former President George H.W. Bush, who died at age 94 on Friday.In a joint declaration, the group of nations said the current multilateral trading system is "falling short of its objectives and there is room for improvement," and supported reforms to the World Trade Organization.
2018-12-03 00:00 reading：1393
Expect a photo op and a 'mock deal' at the Trump-Xi meeting — not a long-term truce, says economist
Trade news

Expect a photo op and a 'mock deal' at the Trump-Xi meeting — not a long-term truce, says economist

Expect a photo opportunity, a "mock deal," and temporary market relief from the much-touted meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G-20 meeting, an economist said on Friday."We don't think this deal will be engineering a long-term truce between the two countries," Bo Zhuang, chief economist and director of China research at TS Lombard, said of the meeting in Buenos Aires, Argentina next week.Zhuang told CNBC he expected a "photo op" and a probable "mock deal" from the meeting between the leaders of the world's two largest economies, "which means there will be temporary market-positive feedback from that."But trade tensions will continue to escalate, he added.China's economy will be hit by the trade war, with real GDP growth getting shaved by 0.5 to 0.7 percentage points from the beginning of 2019, he said.Zhuang said China doesn't want to provoke further escalation in bilateral relations with the U.S., but Beijing may actually let the Chinese yuan weaken should the tariff fight continue.As for the risk of being labeled a "currency manipulator" should the Chinese yuan decline further, Zhuang said there appeared to be little downside risks from that."Everything has already happened i.e. putting in tariffs, negotiations. Trade war was the worse case scenario even before being labeled a currency manipulator," said Zhuang.
2018-11-26 00:00 reading：1145
After the US and China's weekend clash, all eyes shift to Trump and Xi's next meeting
Trade news

After the US and China's weekend clash, all eyes shift to Trump and Xi's next meeting

Investors and world leaders alike will be glued to the upcoming meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Argentina, hoping for clues to what's next."One gets the sense that he's (Trump) going to be a bit tougher with China" compared with Mexico and Canada, said Paul Gruenwald, chief economist at S&P Global Ratings. The G-20 meeting of the world's developed economies takes place in Buenos Aires from Nov. 30 to Dec. 1.Trump criticized Mexico and Canada for months, claiming they took advantage of U.S. companies through trade, but the three countries reached a new trilateral deal at the end of September to replace the North American Free Trade Agreement.The approach to China has been different. Trump has repeatedly attacked the country for stealing intellectual property, creating barriers to American companies that try to operate in China, and for the massive trade imbalance between the two countries.Differences between the world's two biggest economies were on full display at the Asia-Pacific Economic Cooperation (APEC) summit over the weekend, resulting in the group's failure to agree on a joint communique for the first time in its history.Gruenwald said he's not surprised there were no new developments between the U.S. and China at the APEC summit in Papua New Guinea. He called the G-20 "a better forum" to discuss such issues."I really think the big action's going to be in Argentina in a couple of weeks, so let's see what happens," he told CNBC's "Squawk Box" on Monday, adding that "no one really knows" what will come out of the meeting.In Buenos Aires, the two presidents are expected to meet each other with trade high on their agenda. Tensions between the two countries have dominated economic headlines this year, with both sides imposing tit-for-tat tariffs on each other's products.The trade fight has resulted in the International Monetary Funddowngrading its global growth outlook for this year and next. American banking group Citi said some of its biggest clients have made plans to shift elements of their supply chains to circumvent those additional tariffs, because they expect negotiations between the U.S. and China to last more than a year.Worries that U.S.-China tensions could impede growth have also rattled global markets. Hannah Anderson, global market strategist at J.P. Morgan Asset Management, advises investors to prepare for the rift between the two economic giants to drag on."I'm not particularly optimistic about a walk-back in trade tensions in the next six months," Anderson told CNBC's "Squawk Box" on Monday."If there is an agreement or if there are some positive headlines out of G-20, it's much more likely that it's an effort to cool tensions and a symbolic statement of intent, rather than actual substantive change in resolving the trade tensions between the two countries," she said.
2018-11-20 00:00 reading：1070
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