El-Erian Says He is Pessimistic About a US-China Trade Deal

Economist Mohamed El-Erian said Monday that he’s becoming more and more pessimistic that the U.S. and China can reach a deal to resolve their trade and technology disputes.

“The Chinese made a fundamental mistake strategically at the beginning, realizing they should have followed the path of Mexico and Canada in making concessions quickly,” he told CNBC, referring to the United States Mexico Canada Agreement.

El-Erian, chief economic advisor at Allianz, was not encouraged by President Donald Trump’s Monday comments from the G-7 summit in France that China called and said it’s ready to come back to the negotiating table.

The continued tariff escalations on both sides make it “much harder to get an agreement,” said El-Erian, former CEO of Allianz-owned Pimco. “So the best we can hope for is not even a truce, it’s a ceasefire. What we saw today is somewhat of a ceasefire.”

Before leaving Washington on Friday, Trump said he will raise the existing tariff rate on $250 billion in Chinese products to 30% from 25% on Oct. 1. Additionally, the president said, tariffs on another $300 billion of Chinese goods, which start Sept. 1 and Dec. 15, will now be at a rate of 15% instead of 10%.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza