US and China situation to calm down soon – Nordea Markets

Amy Yuan Zhuang, Research Analyst at Nordea Markets, thinks that the situation between US and China will calm down soon as China has made it clear that it has no interest in a trade war with the US unless Trumps pushes too hard.

Key Quotes

“On the other side, Trump’s appetite for an escalation will be modest given how the markets have reacted to the tariffs and how he has internalised the development in S&P500 during his presidential reign.”

“Treasury Secretary Steven Mnuchin has expressed optimism in the two parties to reach an agreement. We think China will likely agree to import more from the US, from cars to semiconductors to liquefied natural gas (LNG). The latter was mentioned by US Commerce Secretary Wilbur Ross last week. However, the US’s trade deficit to China of USD 375bn will not likely see a big reduction. Even if China fulfilled its whole imported LNG need from the US, it is merely 40 million tonnes of LNG, worth USD 15bn.”