As the risk of an economic slowdown grows in the United States, a trade pact with China could help reduce its severity by obliging Chinese importers to buy more American goods and making Chinese products cheaper in the US, analysts said, while cautioning that many obstacles stood in the way of any such deal.
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An agreement binding China to buy more US agricultural and energy products – something similar to the phase one trade deal reached in 2020 – would give the US a quick windfall, economists said.
They said that if a reduction in US tariffs on imports from China, particularly the additional 20 per cent imposed since February, was part of such a deal, that would be good news for American consumers worried about inflation.
“A US-China trade deal could alleviate inflationary pressures in the US and deflationary pressures in China,” said Tan Junyu, a regional economist with French credit insurer Coface. “It would also likely boost US exports to China.”
While officials from both sides have not begun public discussions on a deal, a story published by the Post on Monday cited multiple diplomatic sources as saying that US President Donald Trump – who appeared to be focused on reaching an agreement – could visit China as early as next month.
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Consumer price increases in the wake of increased US tariffs on imports from other countries and a dip in US employment last month threaten spending in the world’s biggest economy. Citi declared on Monday that the market is witnessing a “pause in US exceptionalism” and suggested it might be time to take profits in American stocks, which it downgraded from “overweight” to “neutral”.