Can a China Trade Deal Actually Keep the Rally Alive?

By Douglas A. McIntyre Published Nov 10, 11:17AM EST

Quick Read

Renewed U.S. tariff proposals on Chinese imports, reportedly as high as 150%, have pressured equity markets while reinforcing the administration’s tough trade stance.
Even a modest U.S.-China trade agreement could ease investor anxiety and extend a bull market now entering its fourth year.
China’s economy remains heavily reliant on U.S. consumer demand, giving Washington leverage in negotiations that could stabilize global markets.

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Can a China Trade Deal Actually Keep the Rally Alive? — © 24/7 Wall St

Watch the Video

Tariff Pressure Weighs on Markets

Lee noted that when the president suggested raising tariffs on Chinese imports to as high as 150%, it triggered last Friday’s sharp selloff. The U.S.–China trade relationship remains the largest single variable influencing global market sentiment. Any escalation in tariffs or restrictions affects industrial supply chains, agricultural exports, and corporate earnings guidance across multiple sectors.

The Power Balance in Trade Negotiations

According to Lee, even the most cautious economists acknowledge that China depends more on U.S. consumer demand than the reverse. The United States continues to serve as China’s primary export destination, making a negotiated deal likely. If both sides can reach an understanding, even a limited one, it could help stabilize prices and extend the bull market’s momentum.

A Bull Market Approaches Its Fourth Year

We are now entering the fourth year of a broad rally that has lifted nearly every major U.S. index. Lee described it as “fixing to start the fourth year of what’s been a pretty strong bull market.” I agreed that any easing of trade tensions could propel equities higher, especially if the agreement resolves key disputes such as railroad and soybean trade barriers.

Looking Ahead to November

As we move through November, both of us expect progress toward at least a framework for a trade deal. Investors appear ready to reward even incremental cooperation, given the outsized role trade stability plays in market confidence. For now, the outlook hinges less on corporate earnings and more on diplomacy between Washington and Beijing.

Transcript:

Douglas: Well, you start to wonder about the US economy, what will kill it first, a collapse in the, in the equity market, or a collapse in the credit market. It could.

[00:00:15] Lee Jackson: Well and Bessent was literally saying, you know, we’re gonna continue with our plan even if the stock market crashes, or you know, he said that recently. So, which was a veiled threat to everybody. It’s like, okay, you know, if we’re gonna continue, even if the stock, you know, we’re not gonna bail you out. And you know, I, the president tends to use kind of a shotgun approach.

[00:00:37] Lee Jackson: And so when he said raise the terms on, on China to a hundred, 150%, well boom. That’s why we had the huge sell off last Friday. And again, it’ll be interesting to see because there, there’s a lot of, there’s a lot on the margin and at the scale size it’s big because,

[00:00:55] Lee Jackson: If we can solve the China problem and the China trade problem, we may see a big continuation of this rally. Market could run a lot.

[00:01:04] Douglas: If the anxiety about a trade war with China disappears, if there’s some settlement, even if it’s not incredibly favorable, it’s just. You’ve put the cows down for the night, you don’t have to worry about stampedes. I think the market gets a very positive benefit even out of a mediocre trade deal with China.

[00:01:24] Lee Jackson: Yeah, I, I agree. And, you know, Bessent’s smart because he, you know, and everybody, everybody that’s even a dime story economist knows this. China depends far more on our economy to strengthen theirs that we do on, on theirs to strengthen ours. I mean, they have to have the ability to, you know, sell products into the United States.

[00:01:45] Lee Jackson: And so, I think you’re right. Even a, a tacitly nice, you know, agreement would set for smooth sailing and then they can get the rest of these tariffs at whatever level they’re gonna be settled out, and then things can settle down a little bit. But I mean, the stock market’s had a huge run. There’s the Mississippi and Southern in me.

[00:02:03] Lee Jackson: We’re, we’re fixing to start the fourth year of what’s been a pretty strong bull market.

[00:02:09] Douglas: I think if they did get over the railroad problem with China.

[00:02:16] Lee Jackson: And the soybean issue.

[00:02:20] Douglas: You will see a deal with China within two weeks. Okay?

[00:02:24] Douglas: It’s the 17th. So as we move onto November, predicting that they will have a relatively comprehensive trade deal.

[00:02:35] Lee Jackson: Yeah. Yeah, I, I agree. Or at least, at least the framework for one, and that that’ll be a start.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.