Trump Expected to Forge a Trade Agreement with China Instead of Imposing Tariffs: BCA

Marko Papic from BCA Research predicts that President Trump will reach a trade agreement with China and challenges widespread concerns about a potential "tariff frenzy." Despite Trump's previous threats to impose tariffs of up to 60% on Chinese goods, Papic views these threats as a strategic move intended to encourage Chinese companies to shift production to the U.S., rather than a genuine policy initiative.

Papic's prediction coincides with reports suggesting that Trump intends to impose an additional 10% tariff on Chinese imports upon returning to office. These reports have sparked speculation about a resurgence of global trade tensions. However, Papic argues that the perceived threat of a trade war with China is overstated.

Indicating the current administration's stance on trade, which includes enforcing a 100% tariff on certain electric vehicle imports and revoking licenses for companies like Huawei, Papic asserts that the trade war is not a future possibility but an ongoing reality. He believes that economic difficulties in China increase the likelihood of a near-term trade agreement between the U.S. and China.

Papic emphasizes that Trump's aggressive tariff rhetoric is consistent with the "America First" campaign promises and aims to steer Chinese companies towards relocating to the U.S. According to Papic, Trump's strategy relies on leveraging China's economic vulnerabilities to achieve a trade agreement that could offer advantageous terms for the U.S.

In summary, Papic claims that fears of an imminent trade war with China are unfounded and that a trade agreement is more likely than many anticipate. He suggests that Trump's tariff threats are part of a broader negotiation tactic rather than a definitive trade policy.