US Treasury Secretary Speaks
The latest headlines surrounding the ongoing US-China trade negotiations have done little to encourage the markets this week.
Speaking with US reporters on Monday evening, US Treasury Secretary Steve Mnuchin said that talks between negotiators are due to start again in Washington in two weeks time, adding:
“The president’s been very clear if we can get the right deal, he wants the deal…If we can’t get the right deal, he’s happy with the tariffs.”
Mnuchin spoke further in support of the President’s strategy saying:
“As you know, the president not only likes tariffs, but he uses them strategically. And he’s right…If it weren’t for the tariffs, nobody would be at the table negotiating.”
Confusion At The Top
In a slightly more comedic twist, there appeared to be some confusion between the president and one of his highest level officials over the recent canceling of Chinese visits to US farms.
Speaking at the UN General Assembly, Mnuchin said that Trump’s team had requested that China cancel the planned visits to US farming regions.
However, Trump appeared unaware, asking Mnuchin:
“Why was that our request, just out of curiosity?”
Mnuchin reassured the president over the request.
Trump replied saying “yeah but I want them to buy our farm products”.
However, again, Mnuchin reassured the president, saying:
“There was no confusion. We want them to buy our agriculture. They’ve committed to buy agriculture”.
US-Japan Trade Deal Under Threat
It was not just the latest news regarding US-Chinese negotiations that has caused concern this week.
Following Trump’s recent announcement that he agreed on a trade deal with Japan, the latest reports have thrown the deal into doubt.
The US president and Japanese Prime Minister Shinzo Abe were aiming to sign a deal at the UN General Assembly this week. However, talks have reportedly come into difficulty. Japan is seeking assurances that the US will not press ahead with planned “national security” tariffs on Japanese autos and auto parts.
The trade deal is designed to increase US access to Japan for US agricultural products along with bilateral reductions in industrial tariffs. And it’s not supposed to see any adjustments to current tariffs and trade rules regarding the auto sector.
Auto sales from Japan currently account for the biggest section of $67.6 billion.
Autos Tariffs In Focus
Trump has yet to follow through on threats earlier in the year to impose import tariffs of 25% on Japanese and European car parts. However. he has not said that he will cancel the tariffs. Japan is reportedly looking for a sunset clause in the trade agreement which removes any trade benefits for the US should the tariffs be applied.
Commenting on the progress of the trade talks between the US and Japan, Japanese Foreign Ministry spokesman Masato Ohtaka said:
“Frankly speaking, we still have some time and all my colleagues in the government are making their best efforts to actually meet this target,”
USDJPY continues to threaten a proper breakout higher. Following an initial move above the bear channel top last week, price has since reversed a little but is holding above the 107.25 level for now. While above here, focus is on further upside with 108.83 the next key resistance level to watch.