The United States and China are getting closer to a final agreement

Representatives of both delegations have reached consensus on almost all of the issues that hamper the implementation of the deal. It only remains to clear the misunderstanding about how the agreement will be implemented and enforced.

There is a meeting between Chinese Deputy Prime Minister Liu He, Robert Lighthizer and Steven Mnuchin, whom we are likely to see the beginning of the final session of talks in Washington. The supposed last session of negotiations is expected to last four months.

Although the deal is "at hand", the two countries still remain divided by two main issues - the fate of the existing Chinese commodity tariffs (which Beijing wants to abolish), and the conditions surrounding the mechanism for imposing transaction parameters which is a requirement of the US) to be able to see if China strictly complies with the clauses.

If negotiations this week are successful, it will pave the way for a meeting between Donald Trump and Xi Jinping this month to sign the agreement that will dispel the gloomy clouds over the world economy and financial markets.

But in the absence of progress in the talks, the United States and China may extend them until the G20 meeting in Japan at the end of June. In the worst case scenario, talks will cut off sharply, leading to further escalation, new tariffs and additional stress on markets.

The most intense will be the day after signing the deal. China will expect the immediate removal of the $ 250 billion of 2017 tariffs, while Washington will want to keep a small part of it in order to continue to exert pressure on Beijing to be involved in the terms.

On the other hand, Lighthizer demands that Washington be given the right to impose penalties on Chinese goods if there is a violation of the terms of the agreement. He also wants a guarantee that China will not take counter-measures with its own tariffs or oppose the World Trade Organization.

Observers, however, say that even if a trade deal is made, it will not eliminate other sources of tension in the economic and strategic duel between Washington and Beijing.

Source: Financial Times

Read more:

• Risk off after the escalation in the Middle East, markets are recovering in a period of calm
• The macroeconomic events for today’s trading calendar
• The US government has confirmed the attacks, Trump is calling an emergency staff meeting
• Has the war between Iran and the US started?
• US markets remain under pressure, traders await Iran’s response