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China and US will stick to trade deal, says Morgan Stanley

Mohit Oberoi
Author: Mohit Oberoi

Last Updated: June 5, 2020

Morgan Stanley chief economist Chetan Ahya does not expect the US to back out of phase one trade deal with China.

Earlier this month, the two countries agreed to phase one trade deal putting some of the contentious issues for the second phase. The phase one trade deal was preceded by a trade war between the two nations last year which saw the imposed tariffs on more than $360bn (£268bn) of Chinese goods, and China has retaliated with tariffs on more than $110bn of US products.

Meanwhile, US-China tensions have increased this year over multiple issues including the source of coronavirus and China’s move to introduce news security laws in Hong Kong.

Ahya is, however, optimistic. Speaking with CNBC he said, “At this point, our view from an economics standpoint … is as long as we have the phase one deal going on and there is no renewed escalation in terms of tariffs, then the global growth projections that we have should be intact”

He added that the Trump administration “would be focused on economy right now and will not want to break the phase one deal.” Ahya is not building an increase in US-China trade tensions into his forecast.

While US Trade Representative Robert Lighthizer has been optimistic about phase one trade deal, President Trump has said that he is “very torn.” Last month, China’s foreign minister, Wang Yi said that US-China relations are headed towards a “cold war.”

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Mohit Oberoi

Mohit Oberoi is a freelance finance writer based in India. he has completed his MBA with finance as majors and also holds a CFA charter. He has over 13 years of experience in financial markets. He has been writing extensively on global markets for the last six years and has written over 6,500 articles. He mainly covers metals, electric vehicles, asset managers, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.

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