Trump May Hold Off Imposing New Tariffs After Xi Meet-Up

China US flags
Chinese and U.S. flags are set up for a signing ceremony during a visit by U.S. Secretary of Transportation Elaine Chao at China's Ministry of Transport in Beijing, China April 27, 2018. (Photo: REUTERS/Jason Lee)

Experts believe the most likely outcome of the upcoming meeting between Chinese President Xi Jinping and U.S. President Donald Trump will end with the latter agreeing to halt tariffs on another $300 billion of Chinese goods.

According to CNBC, investment banking advisory firm Evercore ISI's Strategist Donald Straszheim suggested that the said outcome has a 45 percent probability of taking place after months of trade tensions.

Straszheim further noted that the possibility that the White House will hold off imposing new tariffs without a certain timeframe in place is higher than the probability of having a fixed number of days before the tariffs are imposed.

While this outcome could play wildly in stock markets as uncertainty is a huge reason for global stocks to move forward, restarting talks due to the U.S. holding off tax duties will make for a more flexible space for both sides to move in and negotiate.

"This is a jointly recognized time-out. Higher tariffs by the U.S. are not implemented for maybe a short time, maybe a long time. Real negotiations would presumably be re-launched," Straszheim pointed out.

Another potential outcome that will let hell break loose in global markets and the global economy is if the Xi-Trump meeting ends up without any mention of the tariffs. If Trump does not mention the impending tax duties, Beijing will most likely translate his silence into the tariffs being implemented as soon as possible.

For Straszheim, it is best to "maintain communications" and not allow for the conflict to drag on for a longer period. The trade war has already impacted economies around the world.

A senior U.S. official who spoke to Reuters on condition of anonymity revealed on Monday that the U.S. leader is "comfortable with any outcome" from the meeting between China's chief this weekend.

Economists have been warily watching the move of both China and the U.S. following the trade talks fallout earlier this year. Many are hoping for talks to be revived on a good note and for negotiations to result in a trade deal.

The official noted that the upcoming meeting will focus largely on gauging where China stands at this time - following the fallout of negotiations between Chinese and U.S. delegations as well as the blacklisting of Chinese tech giant Huawei.

Beijing and Washington have been in a trade war since last year but tensions were escalated after the latter accused the Chinese government of reneging on terms of trade between the world's two largest economies.

China denied the accusations and said the U.S. was to blame as it kept demanding more whenever the former agreed on an aspect of the supposed trade deal.

Chinese state media confirmed on Tuesday that Chinese Vice-Premier Liu He has spoken with U.S. Trade Representative Robert Lighthizer through a phone call to resume talks revolving around the trade dispute.

Both leaders reportedly agreed to continue communicating about the trade dispute that has already cost China and the U.S. millions in lost revenue and exports.

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