US To Reach Trade Deal, Russia To Receive Chemical Weapons
The US is expected to pursue a series of trade deals in the coming weeks, aimed at supporting equity markets and reducing the risk of a recession.
The Trump administration has imposed uniform tariffs of 10% on most US trading partners for 90 days, while also offering rebates and exemptions to key industries to facilitate negotiations.
The upcoming trade talks are also likely to involve China, according to BCA Research, although the firm notes that a final deal with Beijing is still a long way off. Trump has made tactical exemptions from tariffs on Chinese electronics and computers, while China has responded with limited concessions.
However, BCA is hopeful that “China will eventually agree to negotiate with Trump,” especially if upcoming data reveals the damage from US tariffs.
“If the data shows a major hit to the Chinese economy, Xi Jinping’s chief negotiator will start answering America’s calls, and negotiations will begin,” said Matt Gertken, head of geopolitical strategy at BCA.
Meanwhile, negotiations with key allies such as Canada, Japan and South Korea are expected to continue. Domestic political pressures in those countries, including recent elections and inflation concerns, are seen as potential catalysts for a deal. BCA estimates that a negotiated settlement could close about 28% of the U.S. trade deficit.
On Russia, BCA believes a ceasefire in Ukraine is likely. The investment research firm argues that Russia’s weak economy and rising military costs are making its campaign unsustainable.
“Russia is likely to accept a ceasefire. If it doesn’t, it will embarrass the White House and unite the rest of the Western world behind Ukraine,” Gerken wrote. Recent U.S.-Ukraine mineral deals and the first arms sale of Trump’s second term have signaled continued U.S. commitment to Kyiv.
Public pressure in the U.S. is also growing, with a majority supporting a ceasefire and increased accountability for Russia. Gerken said Russia’s offer of a three-day ceasefire “looks pathetic” but is a step toward a broader deal.
For investors, BCA expects geopolitical tensions and weak economic data to weigh on global equities, with policy uncertainty weighing on cyclical stocks. For now, BCA prefers defensive stocks over cyclicals.
While the “sell America” trade appears overdone—U.S. tech earnings are holding up—Europe is unlikely to outperform without major stimulus, strategists say.
Source: Investing.com
