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The Phase 1 deal looks dead - Expect Trade War 2.0 in 2021

Remember that China pledged to:

1) Stabilize the CNY (no more material PBoC easing), 

2) more than double imports from the US by 2021 in the Phase 1 trade deal. 

The virus means that China will breach both.

Already before the virus hit, the Chinese pledge to more than double agricultural imports measured in US dollars probably required a material rebound in agricultural prices – that in itself looks sort of optimistic by now. Had it been Gold that they promised to import, it would have been another case. 

The Phase 1 deal is dead as it looks right now. 

The last sentence in the deal says that they will renegotiate in event of “force majeure”. 

The big question is if Trump’s advisers will dare to communicate that before November 2020? We doubt it. 

A trade war 2.0 showdown looks likely for 2021.

The phase 1 deal looks dead. China cannot more than double US imports, when it is de facto closed down

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