Entering text into the input field will update the search result below

What The Market Wants To Know: Will There Be A Quick Tariff Settlement With China?

Martin Lowy profile picture
Martin Lowy


  • Equity markets are hanging on every shred of evidence as to whether there really will be a trade war between the U.S. and China.
  • The market doesn't care what the settlement is, just whether a trade war will be avoided.
  • At least until the outcome becomes clearer, I will continue to be cautious about my equity allocation.

The biggest question facing the equity markets over the next few months is whether President Trump is going to settle the trade spat with China quickly and declare victory - or not. By agreeing to a few win-win changes, my guess is that China would be willing to help create the window dressing to allow Trump to say he won, so long as it is not a real victory for Trump. I do not think China will give Trump an actual victory on trade.

Trump wants a quick victory, but China plays the long game. That contrast is common knowledge. “Trump’s protectionist policies,” said one former Chinese trade official, “will be a short wave in the long history of world trade.” See the quote in the FT here.

What does that mean in practice?

What should our expectations be?

My guess is that Trump does not expect the tariffs ever to actually become damaging. He expects a deal before that time. And one may come. (Holman Jenkins, Jr. of the WSJ, for example, seems to think a productive deal could be struck. His interesting opinion piece called “Trump’s Trade Tactic Might Work” is here.) But I do wonder whether President Trump may have picked the wrong adversary in President Xi Jinping. President Xi is a proud man who leads a proud China. I think he will not be afraid to stand up to Trump and the U.S. on trade. He is likely to say (1) that his policies are now aimed in the direction of developing China’s internal markets, (2) that sanctions against Russia (similar in many ways to tariffs) have caused Russia to develop its internal markets earlier and more vigorously than it might have done otherwise, which might not be a bad thing for China to do as well, and (3) that he has good trade relations with Europe, Russia, and the rest of

This article was written by

Martin Lowy profile picture
I was trained as a lawyer and practiced in the fields of corporate law and bank regulation in large U.S. firms for 20 years, then decided to do other things. My career has included banking and being an entrepreneur. For seven years I was CEO of a high-tech sports business. I have retired from active business and spend full-time writing, mostly on economic subjects. My books include: InStAbILItY: Booms, Busts, the Fragility of Banks, And What To Do about It 2017 High Rollers: Inside the S and L Debacle (1991) Debt Spiral: How Credit Failed Capitalism (2009) Practical Handbook for Bank Directors (1995), second edition due 2012 Corporate Governance for Public Company Directors (2003) Capitalism for Democrats (2019) Capitalism for America (2019)

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.