Morning from Copenhagen.

We keep on hearing from the White House that Trump is allegedly talking to Chinese trade officials, but time after time, China is denying that he has spoken to any Chinese official since he was inaugurated. So whats’ up and down in this, and who’s lying? Clearly one of them is. 

“Sources familiar with the matter” reported earlier today that China considered exemptions on a select number of US goods, and we are now placed in a situation where both sides are reported to be considering exemptions, but none of them are willing to implement them, denying that they were even considering it in the first place.

China has throughout this entire trade war acted with a ton of confidence, which supports the argument that it’s in China’s interest to make it look like there’s no communication between China and the US, no considerations of exemptions etc., but as we are seeing in our model setup, Chinese growth is starting to roll over, meaning that it’s just a matter of time before China has to fold.

The game plan for Trump and his team now seems to be to lock in a trade deal with neighbouring countries / Chinese trade partners asap to gain the upper hand at the negotiation table, and we will thus likely see multiple headlines of Trump / US officials meeting up with Japanese / Indian trade officials soon.

Chart 1: Chinese Growth is Weakening, making the bilateral trade war unsustainable for both sides