China Trade Truce May Help Give US LNG a $30 Billion Boost

China Trade Truce May Help Give US LNG a $30 Billion Boost

China's relief, coming after talks last week between the world's two largest economies, elicited mixed reactions from US business leaders, with some happy to see the prospect of tariffs fade and others saying it would be hard for the Trump administration to regain momentum to address what they see as troubling Chinese policies.

"We may be not quite so aggressive now because China could come back as a huge buyer", he said.

Not all US business leaders welcomed the trade war truce, with some cautioning that Washington would find it tough to rebuild momentum to address what they see as troubling Chinese policies.

In the Reuters article, a Morgan and Stanley economist estimated the agreement would bring $60-$90 billion more in exports during a period of years, but less than the $200 billion trade deficit deduction that President Trump initially demanded.

"They failed to drill down on the biggest frictions facing USA businesses and on those where we are most able to move the Chinese", said Mary Lovely, a Syracuse University economist who specializes in trade.

"I don't think we're saying tariffs are over - far from it", he said in an interview with CNBC.

Leaders on both sides of the political aisle claimed Trump had backed off his tough talk on China by agreeing to the deal.

U.S. Trade Rep. Robert Lighthizer issued a sharp statement: "Getting China to open its market to more U.S. exports is significant, but the far more important issues revolve around forced technology transfers, cyber theft and the protection of our innovation".

In March, Trump announced the USA would place a 25% tariff on imported steel from China, and 10% tariff on imported aluminum.

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Shares of massive U.S. multinationals Apple (AAPL), Boeing (BA), Caterpillar (CAT), Deere (DE) - all of whom generate a significant percentage of their sales from China - led the market's move higher.

Threatened U.S. restrictions on Chinese investments in the United States also appeared to be put on the back burner.

"The big news over the weekend was that a trade war was averted, and so we had an adjustment, covering bets that there would be negative news coming out of the discussion", said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. Real structural change is necessary.

Commerce Secretary Wilbur Ross will have to hammer out the details, specifically about increasing exports of agriculture and energy products to China, at the next round of talks in Beijing. Some of Trump's outside advisers on trade during the campaign, including former Nucor CEO Dan DiMicco and American Enterprise Institute scholar Derek Scissors, suggested the administration hadn't secured enough in the negotiations. Trump later ordered Lighthizer to seek up to an additional $100 billion in Chinese goods to tax.

The two sides, however, gave no indication of how much progress they had made towards ending their dispute entirely.

In February, Cheniere - America's first exporter of shale gas overseas - signed the country's first long-term contract with China National Petroleum Corp. for 25 years for a terminal under construction in Texas. China is promising to increase its imports of USA agriculture and energy products.

"China represents an enormous economic opportunity for U.S. LNG", Katie Bays, an analyst at Height in Washington, said in a note to clients Monday.

The prospect of a trade war has shaken financial markets and alarmed corporate executives. "Normally, there are different factions, and they both fight within the bureaucratic process for their viewpoints. but this is much more freewheeling, and the most volatile person is the president". "If they can work out a broader deal with the Chinese, that is a good thing".

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