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James Hyerczyk
US-China

After the U.S. equity market close on Thursday, CNBC reported trade talks between the U.S. and China were set to resume October 10-11 in Washington, D.C., according to three people close to the talks. Chinese Vice Premier Liu He will be representing the delegation from Beijing, one of the people told CNBC.

The White House, the Treasury Department and the Office of the U.S. Trade Representative did not respond to CNBC’s requests for comment before publication. This isn’t a big deal. Perhaps they had nothing to say since the Trump administration said weeks ago they expected the talks with Beijing, which stalled out in May, to resume next month.

Will Liu Turn Hardliner?

Chinese Vice Premier Liu He attended spring negotiations as the “special envoy.” With that title, he was empowered to negotiate on behalf of President Xi Jinping and pledged to buy American Soybeans in the Oval Office with President Donald Trump.

However, when he returned to China, he was stripped of that title after Communist hardliners grew frustrated with some of the concessions to which he had agreed.

When he returns to Washington on October 10-11, it will be interesting to see if he presents himself as a hardline negotiator, which could hinder progress toward a trade deal. No one is expecting a deal to be struck at this meeting, but no one wants to see the United States and China move further apart, which could lead to an escalation of the trade war.

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Watch the Dates

In September, President Trump obliged a formal request by Chinese officials to delay a planned escalation of tariffs on October 1, set to coincide with the politically sensitive anniversary of the People’s Republic. Trump followed through with the request so tariffs on $250 billion in Chinese goods will now rise to 30% on October 15, four days after the next round of talks wraps.

I believe investors will find out if the trade negotiations were successful if they watch how Trump handles the postponed tariffs.

If he decides to further delay the tariffs then this will send a signal that progress was made at the negotiation table.

If Trump moves forward with the tariffs on October 15 then this will complicate matters since it will indicate that both sides are still far apart and Trump feels China needs to continue to feel pressure in order to finish a deal in a timely manner.

A further delay in tariffs should be bullish for stocks. An escalation of tariffs should be bearish.

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