Neither China nor the US can really give up much in their trade dispute, which means it could last many years. From James Rickards at dailyreckoning.com:
Markets are eagerly awaiting the conclusion of the so-called “phase one” trade deal between the U.S. and China.
Both parties are trying to reach a mini-deal involving simple tariff reductions and a truce on new tariffs along with Chinese purchases of pork and soybeans from the U.S.
The likely success or failure of the mini-deal has been a main driver of stock market action for the past year. When the deal looks likely, markets rally. When the deal looks shaky, markets fall.
A deal is still possible. But investors should be prepared for a shocking fall in stock market valuations if it does not. Markets have fully discounted a successful phase one, so there’s not much upside if it happens.
On the other hand, if phase one falls apart stock markets will hit an air pocket and fall 5% or more in a matter of days.
But even if the phase one deal goes through, it does not end the trade wars. Unresolved issues include tariffs, subsidies, theft of intellectual property, forced transfer of technology, closed markets, unfair competition, cyber-espionage and more.
Most of the issues will not be resolved quickly, if ever.
