The U.S. and China are unlikely to reach a full deal at the end of their 90-day ceasefire on tit-for-tat tariffs, but a sustained decline in markets will push President Donald Trump to close a deal, an expert told CNBC on Monday.
Washington and Beijing are meeting for trade negotiations at the vice ministerial levelin the Chinese capital on Monday and Tuesday — and markets have been keeping a close watch on those developments amid growing concerns about China's slowing economy and its impact on U.S. businesses.
"Trump ties his political fortunes to the Dow Jones Index and the best hope for the talks (is) that the Dow continues to slide and this actually create(s) incentives for him, because this provides political incentives," said Pushan Dutt, an economics and political science professor at INSEAD business school.
The Dow is up 0.45 percent since the start of the trading year after rallying on Friday, after falling 8.2 percent since the start of December.
The Chinese commerce ministry announced on Friday that a working team led by Deputy U.S. Trade Representative Jeffrey Gerrish will be in Beijing to conduct "positive and constructive discussions" with their Chinese counterparts. Global markets rallied after that news, in part due to hopes for progress in the ongoing trade dispute.