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Don’t expect a 'phase two' US-China trade deal: analyst

Kenneth Underwood
Senior Producer

Stocks hit record highs again Thursday amid new hopes China and the U.S. may finally be making progress towards a trade deal. 

Overnight, Beijing said the two countries had agreed to roll back tariffs as part of the yet-to-be signed “phase one” deal. But will a deal actually get done?

President “Trump is probably going to go for some portion of this,” Eurasia analyst Jeff Wright told Yahoo Finance’s On the Move. “It’s pretty clear at this point that Trump wants this deal enough that he's probably willing to give some tariff relief. I think it will be phased in. It's probably going to be at least publicly made conditional on the Chinese meeting certain commitments on their side...Trump is sufficiently focused on the economy now ahead of 2020 that this is something that's pretty attractive to him.”

U.S. President Donald Trump meets with China's President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque

What about ‘phase two’?

If the reported “phase one” deal goes according to plan, the celebration could be short lived. 

Wright said, “We are quite skeptical about the chances for any substantial progress in phase two. The issues that are left are left for a reason because they're very hard, and particularly on the Chinese side. They would require some, potentially some fundamental changes to the Chinese development model.”

In fact, Wright believes any “phase one” deal where Trump provides tariff relief makes any final deal less likely. 

“Our view about the possibility of phase two is quite dim...,” he said. “I think the odds of success, particularly as the election gets closer, are quite small.”

Kenneth Underwood is a senior producer for Yahoo Finance.

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