U.S., China Reportedly Close To Trade Deal

US Trade Representative Robert Lighthizer

The Journal said talks last month in Washington had helped narrow differences, meaning a formal agreement might be ready when President Donald Trump and his Chinese counterpart Xi Jinping meet in late March while Xi is on a European trip.

China is offering to lower tariffs on US farm, chemical, auto and other products as part of a trade deal that is nearing completion, a new report says.

Significantly, the trade deficit with China hit a record $419 billion, despite a series of tariffs the administration imposed on Chinese goods to decrease reliance on imports.

With Asian and European markets already in positive territory, the Dow Jones index joined the upbeat mood as trading got underway in NY.

However, Seoul edged down 0.2 percent while Taipei slipped 0.4 percent.

The US is now locked in a trade battle with China over what it claims are unfair trade practices, resulting in tit-for-tat tariff increases on each others' goods.

"While hopes on both fronts are likely to end up being vindicated, the good news would largely now seem to be in the price and the scope for further gains not that obvious". Hong Kong's Hang Seng advanced 0.5 per cent to 28,959.59 and Seoul's Kospi lost 0.2 per cent to 2,190.66. After accounting for the impact of higher tariff revenue and the benefits of higher prices to domestic producers the study found the aggregate annual loss for the USA economy fell to $6.4 billion, or 0.03 percent of GDP.

Japan's Nikkei strengthened more than 1 percent.

The battle between the two biggest global economies has rattled global financial markets for months.

"The president thus begins his reelection drive with a core campaign promise unfulfilled - and with a recent flurry of economic research showing that his embrace of tariffs is damaging the US economy", The Washington Post notes. That's because shipments to China virtually halted when the trade war began.

A slew of surveys has highlighted how much manufacturers are suffering worldwide, particularly those exposed to China's slowdown, and added to expectations that central bank policy tightening is as good as finished. January figures are due March 27. The country plans to issue a 10-year bond this week, encouraged by the upgrade.

The dollar index rose against a basket of major currencies to its highest in a week. It was last down 0.2 percent at 96.356.

The euro held in familiar ranges and was last at $1.1376.

The study by Goldberg, Pablo Fajgelbaum of UCLA, Patrick Kennedy of the University of California, Berkeley, and Amit Khandelwal of Columbia also found that consumers and US companies were paying most of the costs of the tariffs. Brent crude, used to price global oils, added 15 cents to $65.22 per barrel in London.

Sydney rose 0.4 percent and Singapore 0.8 percent, while Wellington added 0.7 percent and Manila 0.6 percent.

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