Home / NEWS / Beijing Makes Trump $1 Trillion Offer To Seal China Trade Deal; Dow Jones Rises

Beijing Makes Trump $1 Trillion Offer To Seal China Trade Deal; Dow Jones Rises

Beijing is reportedly promising the moon to reach a China trade deal with President Trump. A new Bloomberg News report says China has offered to buy more than $1 trillion in additional imports over six years, shrinking its $323 billion trade surplus with the U.S. to zero by 2024. While investors are increasingly confident that a China trade deal will happen, the news of a Chinese buying spree added a little hot sauce to the Dow Jones and broader stock market rally on Friday.

After the report, the Dow Jones closed up 1.4%, the S&P 500 index gained 1.3% and the Nasdaq Composite advanced 1% on the stock market today. The Dow and S&P 500 moved above their 50-day moving averages on Thursday on China trade deal hopes.

Is China Trade Offer Realistic?
The news is pretty stunning, but may be too good to be realistic. Back in May, China was reportedly only offering to boost purchases of U.S. goods by about $70 billion over several years. That might have done little to curb the trade gap. The new offer envisions a dramatic shift in global trade. But Bloomberg reported that U.S. negotiators are doubtful it could happen and wary that China’s commitments are too far into the future. The first year would see roughly an additional $45 billion in purchases by China.

It’s not yet clear how Beijing proposes to achieve the shift. Buying American agricultural products, natural gas, and perhaps oil are certainly part of the puzzle. Deere stock, which benefits when American farmers are thriving, surged higher on the news. Deere (DE) rose 2.8%. Dow Jones component Caterpillar (CAT), which gets a big slice of revenue from China, rose 2.2%.

China Trade War Escalation Risk Fades
Chinese and American officials are trying to strike a China trade deal that would avert the escalation of Trump tariffs from 10% to 25% on $200 billion in Chinese imports starting March 2. A China trade war escalation now looks highly unlikely, which is big in itself.

The U.S. and China reportedly are having trouble agreeing on safeguards for U.S. technology and intellectual property. By making such a dramatic offer to buy American goods, China seems to be trying to change the subject, focusing attention on the intermediate-term benefits to the U.S. economy rather than the long-term geopolitical rivalry between the countries.


H/T investors

About admin1

Check Also

Trump Blindsides Congress – He Never Gave Pelosi A Chance

Everyone missed how Donald flew past Nancy – she never saw him coming. Trump’s State …

Leave a Reply

Your email address will not be published. Required fields are marked *