Key Takeaways
U.S. trade chief Jamieson Greer affirmed a stable trade relationship with China on Tuesday, calming investor fears, but warned that a comprehensive resolution for the U.S.-Mexico-Canada trade agreement (USMCA) is improbable by its July 1 deadline.
"I would characterize our economic and trade relationship as stable," Greer said at a Hudson Institute event in Washington, D.C. "What we aren’t looking for is massive confrontation, or anything like that."
The comments come as investors have largely set aside trade worries, soothed by a de-escalation in tensions between the world's two largest economies. The summit between President Donald Trump and Chinese leader Xi Jinping, rescheduled to mid-May due to the Iran war, is a key focal point for maintaining this stability. Greer noted the U.S. aim is to ensure continued access to rare earth metals from China.
The primary risk now shifts to North American trade, where failure to resolve outstanding USMCA issues by July 1 could start a 10-year timeline to phase out the pact. Greer indicated that while many issues with Mexico are on track for resolution, significant disagreements persist with Canada, potentially impacting the automotive and manufacturing sectors that rely on the trilateral framework.
Greer said the U.S. would continue to protect its national and economic security, citing existing tariffs as a tool to manage the trade deficit. However, he emphasized that the two economic giants have “settled into a stable situation.”
At the upcoming summit, U.S. officials plan to discuss setting up a “board of trade” with their Chinese counterparts. This body would aim to sort out non-sensitive trade issues, clearing the path for more complex negotiations on "the sticky issues," Greer said. While some strategists have suggested the summit could open doors for Chinese investment in the U.S., Greer downplayed the prospect of a broad investment program.
"With investment, I don’t think we’re at a point in our relationship with the Chinese where we want to talk about the investment programs either way,” he said. “We really need to get that trade deficit under control."
The other major trade issue facing U.S. companies is the USMCA. The July 1 deadline requires the U.S. to decide whether to keep the current trade pact or propose modifications.
Greer expressed a preference for a more bilateral approach, with separate protocols for each country to address different issues. "We aren’t probably going to be able to resolve all the issues by July 1 but we are on track to resolve many of them and will move as quickly as possible,” Greer said.
This article is for informational purposes only and does not constitute investment advice.
