Markets need to brace for extended US-China trade talks: Chris Garcia

Channel: Fox Business
Published: 05/20/2019 04:12 PM

Former U.S. Commerce Department Deputy Director Chris Garcia on U.S. trade talks with China and the future of USMCA. FOX Business Network (FBN) is a financial news channel delivering real-time information across all platforms that impact both Main Street and Wall Street. Headquartered in New Yo...

Oh to me, right now is us commerce department, former deputy director v carr financial, ceo, chris garcia, chris good to see you thanks so much for joining us. What'S your view of all of this i mean there's a trade story here, there's a national security issue around beijing and obviously this president is not backing down. Will this be a problem for the economy in the us and markets here? Well, i ...
think markets need to brace maria first of all for a long and extended negotiation process. This is something that china's done historically in the past they've kicked the can down. The road they've tried to run the clock out on previous presidents administration and thistime they're gon na try to run the clock out on the trump administration. I'Ve always said that the the trading relationship with china, maria, is kind of like a really bad contract. With your cable provider, you know you're getting ripped off. You know you get a better deal somewhere else, but it's not until you threaten to leave that they finally treat you like a valued customer again, but this time we're dealing with trillions of dollars and national security yeah. I understand that, but you know you've got the suppliers to huawei, for example, suspending business after the ban in the united states. These are you know: companies like intel qualcomm, i mean this. They supply a productto, faraway and and and the to do business back and forth. This will impact earnings in the us correct, yeah.

It'S it's absolutely gon na impact impact earnings, because you're cutting off a key buyer. But you know this is a huge haymaker that the united states just landed to make sure china knows that we're not playing games. You know if china decides that they want to. You know to completely violate you know, for example, the iranian sanctions. We saw the outright ban of zte in 2018. This might be a little bit different. This is a little bit more of an olive branch still being extended by the united states, because this is a little bit differentwe're just doing it on a case by case basis by listing them on the entity list, but still you're you're completely. Banning you know the outright sale of software you've got hardware that they're not able to source from key come from key suppliers, but these are things that you know. We have warned china about for years. Yeah you have to stop playing these games. You have to stop cheating and then we have to open up a for a more fair free and reciprocal trading relationship with them yeah and by the way you know, wall street is writing all about this. This morning and on friday and a couple of analysts believe that winners in thiscould be nokia and ericsson, there well placed to benefit from any disruption from huawei, but look at google reportedly cutting ties with the chinese telecom giant.

Reuters is reporting that china will not have access to parts of google's android operating platform. The future versions of hua ways for smartphones that run on android will also lose access to the popular services like gmail and youtube. So, google, even though among those tech companies that have been entrenched in china, it choo pulling back from huawei, oh yeah, i know so google, that's! That is the jemez core. That is the hammer, that's being dropped. You know any us software that that that users that are using a huaweidevice are used to having available at their fingertips, they're no longer gon na be able to use those if they continue to use the existing device. That means that future software updates will leave them vulnerable to attacks, for example from those of the chinese. But again, this is the thing we're if you continue to lie, cheat steal, not respect the us trading relationship and the norms, then, just like seinfeld said no soup for you. Alright, so we've got we've got markets. I guess that so far are siding with the president. It hasn't been all that bad in terms of performance, so you feel like. Maybe i don't know if they're under estimating this or just expectinga deal at some point, but but but supporting the president's actions. What about us mca? The president looks to move this trade agreement along.

He withdrew the towers of 25 percent and 10 percent respectively on billions of dollars in steel and aluminum from canada and mexico house, minority leader, kevin mccarthy and michigan congresswoman debbie dingell joined me yesterday on sunday morning, futures both said this is a good sign, as this Is expected to pass, but nancy pelosi has to bring it to the floor first years what they said. One of the requirements the democrats have had is that they changed their labor laws. Well, that has passed the senate in mexico. So now there isnothing holding us back to pass the bill that would bring more jobs to america, and the timing could not be more perfect. It will only make us stronger in this battle with china, where china doesn't want to have a fair trade agreement, but it would unite americas, and that is something that would be much stronger in this debate going forward. It'S got to be stronger enforcement of those labor provisions and they've got to make it there. General motors move to blazer plant to or put a blazer plant in mexico and is paying a dollar fifty an hour and we're competing with that telly. And it's not tough enough to make sure that that doesn't happenyet into the kevin mccarthy did not talk about the fact that there are pharmaceutical provisions in there that will increase the cost of drugs. We need to address those ambassador light. Houser knows that those have to be addressed. He is dealing so this is. This is still being seen as really a political football chris, but if us mca does not pass, is that a big problem for the economy here in markets, because you pelosi has yet to commit that she'll bring it to the floor for a vote? Yeah? No summary.

That'S it that's a key key part of this whole negotiation with china. I think this is why the president set this up, this wayby being able to leverage our regional allies, and i'm not just talking about canada and mexico. But it's also the eu in japan, where the president decided to forego those tariffs on autos for six months. But we have to pass the u. s. mca to build a regional coalition of the willing, so to speak so that we can really increase the pressure on china to try to isolate china and just like just like larry kudlow, would say early on. You know he would talk about, you know needing to have and certainly kevin has it certainly bob light hyzer needing to have a coalition of the willing. This has to spend multiple administration's so who can passus mca? If we can get more pressure from japan and the eu, we can really put china in a in a tight tight spot, put them in a corner to make sure that they actually finally follow these normal trading rules of the of the new trip trading order. Yeah. Well, they're gon na have to prove the world that they're trustworthy, they'll prove to the world that they're trustworthy. So i imagine these things matter to china will be watching chris good to see you thanks so much chris garcia. There.

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