Tags: China | Trump Administration | siegel | trump | trade | deal | reelection

Jeremy Siegel: Trump Needs China Trade Deal to Save Re-election Hopes

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By    |   Tuesday, 14 May 2019 05:13 PM

Wharton School professor Jeremy Siegel said President Donald Trump must forge a trade deal with China at any cost because his re-election hinges on a robust stock market and thriving economy.

“He cannot afford to let that slip. He knows it. His political advisers know that. A year from now, we can’t be lower on the stock market than we are, and our economy has to be better. So it’s up to Trump make a deal,” Siegel told CNBC.

“The market wants a solution. Don’t forget, the market didn’t really want this trade war to begin with,” Siegel said. “Let’s not rock a boat that’s going well.”

Siegel said the details of any deal probably won’t even matter all that much.

“You can pull victory out of defeat. No one is really going to look at the details,” he said, explaining that Trump can call any agreement a victory even if it isn’t in reality.

For his part, Trump on Tuesday called the trade war with China “a little squabble” and insisted talks between the world’s two largest economies had not collapsed, as investors remained on guard for a further escalation of tit-for-tat tariffs, Reuters reported.

Trump, who has railed against what he describes as China’s unfair trade practices and threatened to impose punitive levies on all its imports, softened his tone in a series of remarks expressing optimism about reaching a trade deal with Beijing.

“We’re having a little squabble with China because we’ve been treated very unfairly for many, many decades,” Trump told reporters, referring to U.S. complaints about Chinese intellectual property and subsidy practices.

Trump also denied talks with China had broken down after Washington punctuated two days of negotiations last week with another round of tariffs on Chinese imports, with Beijing following suit on Monday with higher tariffs on U.S. goods.

On Wall Street, U.S. stocks reclaimed some of the ground lost in the prior day’s steep sell-off, with tariff-sensitive technology stocks leading the S&P 500 and the Nasdaq higher as investors were heartened by a tonal shift in U.S.-China trade rhetoric, Reuters said.

All three major U.S. indexes closed in the black, although they pared gains late in the day and clawed back less than half of Monday’s losses, which were the largest one-day percentage drops in months. The bellwether S&P 500 remains nearly 4% below its all-time high reached two weeks ago.

Meanwhile, here’s another perspective on how much the trade standoff is sinking the market: The dollar value S&P 500 stocks lost in a single day as the sell-off accelerated was more than the U.S. imports from China in an entire year, Bloomberg reported.

The U.S. buys everything from from electronic equipment to machinery to furniture and footwear from Beijing, with imports totaling $539 billion in 2018. The S&P 500’s 2.4% slide on Monday wiped out $600 billion of market value.

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Wharton School professor Jeremy Siegel said President Donald Trump must forge a trade deal with China at any cost because his re-election hinges on a robust stock market and thriving economy.
siegel, trump, trade, deal, reelection
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2019-13-14
Tuesday, 14 May 2019 05:13 PM
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