Although China's economy has been idled by the coronavirus which is now spreading to other parts of the world and even dampening consumer demand here in the United States, Treasury Secretary Steve Mnuchin says it won't have an impact on the purchasing agreements made in "phase one" of Trump's "biggest and greatest deal ever."
Mnuchin participated in an interview with Reuters where he said it's too early to make a prediction about the economic outcomes of the virus.
China was focused on the virus for now, he said, but Washington still expected Beijing to live up to its commitments to buy more U.S. products and services under the trade deal.
“I don’t expect that this will have any ramifications on Phase 1. Based on everything that we know, and where the virus is now, I don’t expect that it’s going to be material,” he said.
“Obviously that could change as the situation develops. Within the next few more weeks, we’ll all have a better assessment as there’s more data around the rate of the virus spreading.”
While Mnuchin says it's too early, the world's second largest investment bank, Goldman Sachs, apparently doesn't think so. Goldman downgraded their for first quarter forecast for economic growth in the United States from 1.4 to 1.2 percent this morning because the virus is reducing demand. Chinese officials have also said it's possible that an economy that typically grows by 6 percent each year may slow to 1 percent during the first quarter.
The Dow Jones Industrial Average also dropped by 1000 points this afternoon, the biggest drop since October 2018. The market erased all of its gains for 2020.
Maybe I'm wrong and Steve Mnuchin is right, but he's not right about very many things. He still says the tax cuts are paying for themselves.
I just don't see the consumer demand fairy descending from the heavens and delivering double the amount of exports that China purchased even before Trump's trade war began.