The Next Chapter in the U.S.-China Trade War

PGIM Fixed Income

July 2019

With President Trump and President Xi agreeing to restart trade negotiations, our baseline remains that the both face compelling incentives to resolve the conflict. Trump needs a strong economy and a rising stock market leading up to the presidential election in November 2020. Xi has the dual of objectives of hitting his 6.0-6.5% growth target and avoiding further accumulation of debt and leverage in the economy. Given this backdrop, we see four scenarios as to how the trade talks might proceed over the next year.