The upcoming meeting between President Donald Trump and Chinese President Xi Jinping at the G-20 summit may result in a “cease-fire” in the trade war, former Obama administration economist Christopher Smart told CNBC on Wednesday.
The two leaders are set to meet for dinner on Saturday to discuss trade and other issues.
Smart, head of macroeconomic and geopolitical research at Barings, said that the G-20 gathering of world leaders is typically a highly choreographed event. However, Trump has already shown he likes spontaneity.
“It’s entirely possible that we could come out of this meeting, in spite of the rhetoric going into it, with a truce,” said Smart, who was special assistant to the president at the National Economic Council from 2013-2015. Before that, he was deputy assistant secretary of Treasury.
However, it won’t solve the problem since there are fundamental differences between the two economies that could take years to solve, he said on “Power Lunch.” “But there could be sort of a cease-fire that can kick this problem into next year.”
Trump is increasingly anxious about the impact of a long trade war on the economy and the financial markets, according to The New York Times. Therefore, Trump could push for a compromise at the summit in Argentina, the report said, citing several U.S. officials.
Any compromise would be a sharp turn from his tough talk of late. Earlier this week, Trump told The Wall Street Journal it is “highly unlikely” that the U.S. would delay increasing tariffs on $200 billion of Chinese goods to 25 percent. He also said the administration would target the remaining $267 billion worth of goods from China that haven’t yet been subject to tariffs.
Smart said the list of U.S. demands, like China’s government subsidies and its alleged forced technology transfer and intellectual property theft, won’t be solved this weekend. Instead, the result of a cease-fire may be something like an agreement to set up a commission to study the issue, which would lead to a delay in the U.S. raising tariffs.
Dan DiMicco, who serves on the president’s advisory committee on trade policy and negotiation, doesn’t see Trump not moving forward with 25 percent tariffs. DiMicco is also the former CEO of Nucor.
“President Trump will stay strong. He is definitely committed to his issue,” he said on “Power Lunch.” “It’s a much bigger thing than trade.”