Trump administration considers a trade war ceasefire

Trump trade war costs Broadcom 2B

For over a year now, the U.S.-China trade war has wreaked havoc on several U.S. industries, including the technology sector. Indeed, an August tariff increase/currency value adjustment cost America’s top five tech firms $162 billion. However, after months of escalation and entrenchment, the Trump administration is reportedly considering negotiating a potential trade war ceasefire.

Trade War Ceasefire Details

On September 12, Bloomberg revealed President Trump’s advisers have discussed approaching China with an interim trade deal. As part of the agreement, the United States would rescind some of its new import taxes on Chinese goods. Moreover, Washington would not enact new tariffs on Sino made electronics scheduled to go into effect in December.

However, the federal government wants some significant concessions from China to make the interim deal happen. The Trump administration reportedly wants the Asian superpower to honor its previous agreement to buy large quantities of American agricultural products. Furthermore, Washington wants Beijing to institute a crackdown on local firms that steal U.S. intellectual property.

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Bloomberg noted that the President hasn’t yet approved the White House trade war cease-fire plan. When asked about an interim trade agreement on Thursday, the Commander-in-Chief expressed openness to the idea but wanted a lasting deal.

“A lot of people are talking about, and I see a lot of analysts are saying: an interim deal, meaning we’ll do pieces of it, the easy ones first,” said Trump. “But there’s no easy or hard. There’s a deal or there’s not a deal. But it’s something we would consider.”

Why the President Wants a Trade Deal Now

Having started and repeatedly escalated the trade war, the President’s move to end the conflict now seems abrupt. However, the Commander-in-Chief has seemingly changed tact because of the forthcoming 2020 U.S. presidential election.

For one thing, the Trump administration is concerned about the impact of the December tariffs. As they could have the effect of raising the prices of popular consumer goods like smartphones, video game consoles, and smart TVs, the White House could face blowback from the electorate.

Another issue is that U.S. farmers are becoming increasingly discontent with the President because his trade war is hurting their livelihood. Indeed, the Washington Post recently reported China’s retaliatory tariffs on wheat, soybeans, and pork is driving loan delinquencies and bankruptcies among the agricultural community.

If a significant portion of the farming community turns against Trump, he will struggle to win re-election next November. Bloomberg also pointed out that reduced commerce between the world’s largest economies has prompted slowdowns across the manufacturing sector. Indeed, Idaho-based chipmaker Micron had to make layoffs earlier this year in part due to the trade war. Rising unemployment rates would also hurt the President’s reelection campaign.

News about a potential trade war ceasefire won’t be long in coming. Representatives from the U.S. and China will engage in negotiations next week. Furthermore, Treasury Secretary Steve Mnuchin and U.S. Trade Representative Robert Lighthizer are scheduled to hold trade talks with Chinese Vice Premier Liu He in early October.

For the sake of the economies both nations, here’s hoping the trade talks prove productive.