U.S. and China Barrel Toward Trade-War Deadline: Economy Week Ahead

The March 1 deadline for the U.S. and China to reach a trade deal arrives this week, likely serving as just an early milestone in a long process rather than the end of tensions between the world’s two largest economies.

President Donald Trump has threatened to more than double tariffs on $200 billion in Chinese goods if the two sides don’t reach a deal by Friday. Trump suggested Feb. 22 that he might extend the deadline if progress is made, and may meet Chinese leader Xi Jinping in the “not-too-distant future.”

Negotiations last week in Washington moved matters forward, with U.S. Trade Representative Robert Lighthizer saying the two sides made progress on structural issues, but adding that major hurdles remain. The two countries haven’t yet agreed on the critical issue of enforcement in a proposed currency deal that would ensure Beijing lives up to its promise to not depreciate the yuan, according to people familiar with the matter.

The IMF has warned that a full-blown trade war could undercut global growth at a time when the expansion is already losing steam. With investors on edge and growth at risk, it’s unlikely the two countries will ratchet up their tariff spat, said Bloomberg Economics chief economist Tom Orlik.

“Ignore the arbitrary deadlines. March 1 will come and go. Continued trade tensions — politically expedient for the U.S. — are now the steady state,” Orlik said. “Further tariffs are possible but, in our view, unlikely given the fragile state of growth and markets.”

Lighthizer should have an update this week on the state of the talks. Trump’s top trade negotiator will testify before the House Ways and Means committee on Wednesday.

Here’s our weekly rundown of other key economic events.


Beyond the trade developments, the main event is the congressional testimonies of Jerome Powell, with the Federal Reserve chairman appearing on Tuesday and Wednesday. The big indicator of the week is gross domestic product, a report delayed by the government shutdown that’s expected to show the economy expanded at a 2.4 percent annual pace in the fourth quarter. U.S. housing data also is due, with investors looking for signals on whether the market is continuing to cool.

Europe, Africa and Middle East

The European Central Bank’s pre-decision blackout period begins on Thursday, so comments in the preceding days may take on greater significance in light of speculation for a stimulative measure at the March 7 decision — speeches policy makers Benoit Coeure on Tuesday and Jens Weidmann the next day will be of particular interest. Meanwhile in the U.K., Bank of England Governor Mark Carney will testify on Tuesday on his latest economic forecasts, which remain clouded by the uncertainty over Brexit and the possibility of a disorderly withdrawal from the European Union. In the Middle East, Israel’s central bank will set rates on Monday and Turkey releases trade data on Thursday, while in Africa, investors will be responding to the results of Nigeria’s election on Saturday


This week brings fresh readings on the state of commerce in the trade-dependent region, with reports on Hong Kong’s and Korea’s exports, Taiwan’s industrial production and PMI gauges across Asia due. India reports fourth quarter GDP on Thursday — Prime Minister Narendra Modi will be hoping for a pick up as he gears up for an election campaign. As for monetary policy, South Korea’s central bank meets and will likely keep interest rates on hold.

The Americas

Canada’s fourth-quarter GDP report on Friday will show the extent of what is expected to be only a temporary slowdown stemming from weakness in the oil sector. Brazil publishes its GDP report a day earlier, with the figures likely to give an indication of the scale of the challenge facing new President Jair Bolsonaro as he seeks to boost an anemic recovery. Same story in Mexico, where GDP data come out on Monday morning and will indicate the scale of the country’s economic slowdown. On Thursday, Chile will release its copper production statistics, a key indicator of the country’s economic health.

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