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Investing.com -- Raymond James strategist Ed Mills said Monday that the firm expects “de-escalatory outcomes” from this week’s meeting between U.S. President Donald Trump and Chinese President Xi Jinping, viewing recent trade tensions as efforts to “gain leverage vs. a material desire to ramp up tensions.”
The two leaders will meet in Busan on Thursday as part of Trump’s first Asia tour of his second term.
Mills stated that the “readouts from high-level meetings between the U.S. and China this weekend were positive,” reinforcing expectations for easing measures on trade and technology restrictions.
“We expect to see another round of tariff suspension and de-escalation on issues such as rare earths export controls as a base case,” the strategist said.
Raymond James also sees “a window of opportunity for negotiated reductions in U.S. tech restrictions on leading-edge semiconductors and semi cap equipment.”
While the agenda appears broad, the firm believes progress will likely come through incremental easing rather than sweeping agreements.
“Many of the steps forward on those fronts would come in the form of de-escalation (e.g., reducing the 20% fentanyl tariff, resuming U.S. soybean purchases); as such, we do not expect to see a ‘grand bargain’ come out of this meeting,” Mills wrote.
Raymond James added that Trump’s decision to impose an additional 10% tariff on Canadian goods and the pending expiration of a 90-day pause on Mexico tariffs will also be closely watched.
“The risk this derails over strategic miscalculations or trigger issues always remains,” the firm warned, adding that China’s support for Russia’s war in Ukraine will be another key point of discussion.