Trump’s re-election in 2020: good news for China’s economic agenda?
Is the end in sight to the U.S.-China trade dispute? I ask the question tentatively, but China did spark hopes that a deal may be reached after agreeing with Washington to cut back on certain tariffs.
There has been an ongoing argument relating to the trade war, with some saying China was hanging on, focusing on the long game and waiting for Donald Trump to leave office before dealing with another administration.
However, whilst this view may have held up before, to my mind this is not what’s happening now, and this is what’s driving the recent advancements in the trade talks.
It’s now likely that China is seeking to reach an agreement within the trade negotiations with the U.S. and cancel tariffs as soon as possible, as this will help Trump’s re-election campaign.
And, it would seem, China wants to see Trump re-elected in 2020 in order to fulfil its medium and long-term economic goals.
Indeed, Trump’s re-election would favour China for two key reasons.
The first is because they will assume that striking a deal with Trump to bring an end to the trade war will, in all likelihood, be easier than with certain other people.
These include potential Democrat rival, Elizabeth Warren, who according to many supporters, is a strong candidate to enter the White House next year.
It’s possible that Ms Warren would adopt an even tougher stance on China than Trump, not just in relation to trade, but also issues such as labour rights and climate change.
Second, in spite of the trade war, Trump’s policies and rhetoric have, in essence, been strategically helpful to China in reaching its longer-term objectives.
In many respects, Trump has dented Washington’s global credibility, international governance bodies and key alliances, as well as being apathetic, often hostile, towards major trading agreements.
All these factors are detrimental to America’s position as global primary superpower, whilst providing China with opportunities it hasn’t had previously, in terms of global influence and establishing international trade conventions.
Furthermore, the positive indications from Beijing and Washington on the trade talks between the world’s top two economies have been well received by stock markets, with some hitting record highs this week.
Investors’ excitement will be enhanced further if a deal can be secured, and also if Trump is re-elected.
Nevertheless, U.S. investors should maybe consider whether the Trump administration has provided China with a great strategic opportunity that could negatively impact America’s superpower standing long-term, and as a result, its economic sway.