Trump Says Coronavirus Outbreak "Overrides" China Trade Deal

Update (1130ET): Just as we expected, cold water has already been poured on the optimistic trade news - not by an anonymous official - but by President Trump himself, who told Fox & Friends this morning that the coronavirus outbreak.

"I made a great trade deal months before this whole thing happened. And it was kicking in, you know, a month ago and starting to kick in and starting to produce and then this happens and it sort of overrides so much."

Markets don't seem to care all that much.

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Futures are pointing to a higher open again Friday morning (though that hasn't exactly worked out so well for bulls so far this week) following reports that a hastily-arranged phone call between American and Chinese trade negotiators has produced a commitment to "continue to support" the deal - at least for now.

As SCMP reports: "Top trade negotiators from the United States and China spoke by phone on Friday and vowed to continue to support the phase one trade deal, Chinese state media reported, in their first contact since the agreement was signed in January."

During the call, Liu He (the Chinese vice premier, close ally of President Xi, and top trade negotiator) spoke with Treasury Secretary Steven Mnuchin and Trade Rep Robert Lighthizer and "vowed to implement their trade deal and boost cooperation on public health”,accordi ng to China's official Xinhua News Agency.

As we pointed out yesterday, Beijing is still well behind where it would need to be to hit its first-year commitment to buy tens of billions of dollars in US goods (compared with end-2017 levels).


In a brief statement published on the website of the US OTR, the US team said "both sides agreed that good progress is being made...and that both countries fully expect to meet their obligations under the agreement in a timely manner."

"Vice Premier Liu He, U.S. Treasury Secretary Steven T. Mnuchin, and Ambassador Robert Lighthizer participated in a conference call today.  They discussed economic and trade issues, including the recently concluded Phase One agreement.  The parties shared updates on COVID-19 and their assessments of its effects on economic growth as well as the measures their countries are taking to provide support to their economies.

The parties discussed the ongoing process of implementing the Phase One agreement between the two countries that went into effect February 14.  Both sides agreed that good progress is being made on creating the governmental infrastructures necessary to make the agreement a success.  They also agreed that in spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner.  Meetings required by the agreement have been conducted via conference call and will continue on a regular basis."

All this comes after Trump threatened to tear up the deal earlier this week over frustrations that China wasn't holding up its end.

Interestingly, SCMP reported that a Chinese Gov't Adviser told the paper that "the dialogue has now gone straight to ministerial level may indicate the problem is quite severe."

With that in mind, now we wait for the anonymously sourced report claiming the deal is actually on the rocks...then down we go...