The highly anticipated meeting between President Trump and China’s Xi Jinping will be of huge importance to markets in what Trump expects will be ‘difficult talks’. Hopes for stronger ties between The US and China will hinge upon the US President’s ability to reshape his stance towards China.
Throughout the Presidential race Trump heavily criticised China and accused them of ‘currency manipulation’.
If he wants to do better trade deals with China, he will need to enter today’s meeting with a much softer approach.
US carries huge trade deficit with China
Trump’s plan to renegotiate with China will be difficult given the $374bn trade deficit it currently has, this provides Jinping with a much stronger hand when it comes to US-Chinese trade.
Furthermore, talks around North Korea will likely centre around Chinese sanctions, given that over 90% of all North Korean imports come from China.
This provides President Jinping with another strong card as discussions unravel, leaving Trump with very little power to renegotiate current trade terms.
Will the US Dollar weaken?
Trump’s campaign promises have so far disappointed markets, and today’s meeting with Jinping will the latest test for the US President. If Trump disappoints USD investors will show further doubts towards his ability as President and this in turn could weaken the US Dollar.