So what does the United States want out of the Saturday talks between President Donald Trump and Chinese President Xi Jinping?
In a Wednesday interview with Fox Business Network’s Maria Bartiromo Trump thoroughly confused expectations.
The market consensus had been that Trump and Xi would agree, the market hoped, to restart stalled talks on ending the U.S.-China trade war.
But in his comments Trump, apparently, put an increase in U.S. tariffs back on the table if he doesn’t like the substance of what Xi has to offer. “My Plan B with China is to take in billions and billions of dollars a month and we’ll do less and less business with them,” Trump said today.
And then, to clarify, he said, “My plan B’s maybe my plan A, my plan B is that if we don’t make a deal I will tariff, and maybe not at 25%, but maybe at 10%.” Which might be a repeat of the U.S. President’s threat to raise U.S. tariffs on another $320 billion in Chinese exports to the United States. But at a lower rate.
Wonder why the market might be confused? Especially since Treasury Secretary Steve Mnuchin said earlier in the day that the deal was 90% done. A spokesman for Mnuchin later clarified that the Treasury Secretary meant that a deal was 90% done back in May before Chinese leaders rejected terms that the United States thought had been settled.
As of 2:30 p.m. today New York time the Standard & Poor’s 500 index was down 0.11% and the Dow Jones Industrial Average was up 0.06%. The NASDAQ Composite was higher by 0.28% and the Russell 2000 small cap index had gained 0.09%.
A major reason the market is holding up so well when the G20 talks between Trump and Xi have become so problematic is a big rally in the energy sector. The Energy Select Sector SPDR ETF (XLE) was up 1.78% this afternoon.
More on why oil and the energy sector have rallied today in my next post.
