El-Erian: Trump Has 15 Percent Chance for ‘Reagan Moment’ With China on Trade

El-Erian: Trump Has 15 Percent Chance for 'Reagan Moment' With China on Trade

Investment guru Mohamed El-Erian predicts that President Donald Trump sees a 60% chance that President Donald Trump’s hard line with China and Europe yields “fairer trade.”

The chief economic adviser to Allianz SE and Bloomberg Opinion contributor also set some other odds in a recent CNBC interview. El-Erian puts a 15 percent chance on a “Reagan moment” in trade, but 25 percent odds that Trump’s approach will result in a global trade war.

The idea of a possible “Reagan moment” compares Trump’s stand, particularly towards China trade, to President Ronald Reagan’s tough approach with Russia during the Cold War, CNBC explained.

Reagan also engaged in aggressive trade policies, including quotas on Japaneses cars, CNBC explained.

But the former CEO of investment powerhouse Pimco said on CNBC Monday the real question for investors is “how much damage would we incur in the process of winning this?”

“I’ve said from day one, it’s just a matter of time until other countries realize that their best approach is to collaborate with the U.S. and fix things that are broken,” El-Erian told CNBC.

Meanwhile, recent U.S-China trade talks were heavy on details but short on progress as U.S. negotiators outlined cases of American firms harmed by Chinese practices and China argued it was meeting its WTO obligations, people familiar with contents of the discussions said.

The two days of talks in Washington led by mid-level officials did little to resolve a worsening trade spat between the world’s two biggest economies and ended on Thursday without a joint statement, Reuters explained.

Washington separately held hearings during the week on another round of proposed tariffs on $200 billion worth of Chinese imports that appear increasingly likely to take effect in late September or early October.

And while factions on the U.S. side have given conflicting signals on how hard to press Beijing during the trade dispute, officials from the Treasury Department, which led the talks, and the U.S. Trade Representative, which has taken a harder line, were aligned in their messaging, the people said.

The talks took place as the two sides followed through on threatened tit-for-tat tariffs on $16 billion worth of the other’s goods. Beijing has filed a complaint with the World Trade Organization about the U.S. duties.

During the talks, Chinese negotiators repeatedly invoked what they said was Beijing’s compliance with WTO rules, an argument that did not impress the U.S. side.

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Author: HEDGE

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