Morgan Stanley CEO James Gorman predicted that a full-blown trade war between China and the U.S. would be devastating for the global economy.
“We can’t have a trade war,” Gorman told CNBC. “It will have a devastating effect to the global economy. That doesn’t mean there can’t be changes to the way the trade agreements are being written,” he said.
“This is going to go on, these discussions, for a decade,” Gorman said. “This is a resetting of a relationship with what is now the second largest economy in the world; China is a $12 trillion economy with all its trading powers.”
Gorman speak just ahead of the U.S.-China meeting this weekend. The two sides were laying out an agreement that would help avert the next round of tariffs on an additional $300 billion of Chinese imports, the South China Morning Post reported, citing sources.
However, a Wall Street Journal report that Chinese President Xi Jinping planned to present President Donald Trump with a set of terms Washington should meet before Beijing is ready to settle their trade dispute tempered optimism, Reuters reported.
Meanwhile, Trump's decision on whether to impose a new round of tariffs on Chinese goods is contingent on the outcome of the Xi meeting, for which no preconditions have been agreed, a senior Trump administration official said on Thursday.
The official told Reuters that it also was unlikely that the United States would agree to lift restrictions on sales of U.S. products to Chinese telecom equipment maker Huawei Technologies.
China's commerce ministry said earlier on Thursday that the United States should immediately lift sanctions on Huawei, days before Trump and Xi are due to meet on Saturday at a G-20 summit in Osaka, Japan.
For its part, Wall Street isn't holding out much hope for a full resolution.
“I think expectations for a deal are still fairly low. All markets want to see now is the trade deal is not worsening,” Rick Meckler, partner, Cherry Lane Investments in New Vernon, New Jersey, told Reuters.
© 2026 Newsmax Finance. All rights reserved.