Wharton School professor Jeremy Siegel predicts that President Trump will need to make a trade deal with China if he wants to win re-election.
If he wants to continue the trade war, Trump would “give up” 2020, the Wharton School professor told CNBC.
“My feeling is that the only chance Trump has for re-election is a good economy and a good stock market,” Siegel said.
Siegel expects a trade deal by summer of 2020, ahead of the Democratic and Republican nominating conventions.
Siegel believes that in the end Trump will “make a deal with the Chinese to get the economy back on track,” adding he thinks “that’s his only reelection strategy that will work for him.”
For his part, President Donald Trump on Friday said he was not ready to make a deal with China and even called a September round of trade talks into question, reviving concerns on financial markets that the bilateral dispute is unlikely to end anytime soon, Reuters said.
Trump also sowed confusion by saying that the United States would not do business with Chinese telecoms giant Huawei Technologies, only to have a White House official later clarify that he was referring to a ban on U.S. government purchases of Huawei equipment, not requests for sales by U.S. companies, which are still being assessed.
“We’re talking with China. We’re not ready to make a deal – but we’ll see what happens,” Trump told reporters at the White House before departing for fundraisers on Long Island, New York.
“China wants to do something, but I’m not ready to do anything yet. Twenty-five years of abuse – I’m not ready so fast, so we’ll see how that works out,” he said.
Ties between the world’s two largest economies have deteriorated dramatically since Trump announced on Aug. 1 that he would impose a 10% tariff on a final $300 billion worth of Chinese imports on Sept. 1, prompting China to halt purchases of U.S. agricultural products.
The United States also this week declared China a currency manipulator after it allowed the yuan to slip below 7 to the dollar.