Piet P.H. Christiansen, senior analyst at Danske Bank, points out that there was an escalation in the US-China trade war as Trump continued to lash out at China in a string of tweets and China came with a retaliation response.
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“We are increasingly concerned that the two sides are too far from each other to reach a deal in Q2. The trust between the two sides has been damaged and they both seem to dig in on issues that are important for both countries. For example, on the issue of the need to change Chinese laws.”
“On Friday, China’s chief negotiator Liu He said China will not back down on matters of principle. The next key thing to look for is whether Xi and Trump talk on the phone at some point and try to get talks back on track. However, our concern is that it will require financial stress to create the necessary pressure to get the deal done.”