A pause in US-China trade war would be a ‘big relief’ to markets - economist

With many investors worried about further economic damages from the U.S.-China trade war, even a “pause” in that bilateral fight would be a “big relief” to markets, according to an economist.

“Even if we just get a pause, I think that will be very good. I think it will be a big relief for markets, so I think we will get a risk rally,” Robin Brooks, managing director and chief economist at the Institute of International Finance, told CNBC.

Officials from both countries met in Washington on Thursday to discuss trade, which U.S. President Donald Trump said were “going really well.” Trump is set to meet with Chinese Vice Premier Liu He on Friday.

Many analysts have low expectations for what the two sides could achieve in this week’s talks. Some said the U.S. and China could reach a limited deal for the time being, while others predicted that the next rounds of tariff increases scheduled for Oct. 15 and Dec. 15 would be postponed.

David Dollar, a senior fellow at the Brookings Institution, warned that any deal reached by the two countries may not last. He noted there had been instances in the past when the U.S. and China appeared to have come close to reaching an agreement, only to have the tariff fight escalated all over again.

The U.S.-China trade war has dragged on for more than a year, with Washington slapping elevated tariffs on billions of dollars of Chinese goods and Beijing retaliating with levies of its own. That has dampened business sentiment and sparked fears of a global economic slowdown.