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00:00PROBLEM RIGHT NOW. FRANCINE: GREG, WHAT DO YOU THINK THE CHANCES ARE OF A TRADE DEAL? I KEEP ON HEARING THE ARGUMENT THAT PRESIDENT TRUMP DOES WANT TO DEAL BECAUSE IT SHOWS HIM AS A TOUGH NEGOTIATOR TO G -- NEGOTIATOR WHO GETS WHAT HE WANTS. LOOKING AT THE 2020 PRESIDENTIAL ELECTION, THE ANTI-CHINA, NEED TO BE TOUGH ON THEM, HAS WORKED WITH HIS BASE. GREGORY: THERE IS A DESIRE TO GET SOME FORM OF DEAL. A COMPREHENSIVE TRADE AGREEMENT WILL BE DIFFICULT TO REACH BECAUSE OF THE UNDERLYING TENSIONS AND BECAUSE OF CHINA ' S INDUSTRIAL POLICY AND THE LINGERING TRADE DEFICIT. ALSO BECAUSE OF THIS QUESTION ON HOW DO YOU ENFORCE AND VERIFY ANY TRADING AGREEMENT BETWEEN THE TWO COUNTRIES? IT WILL BE DIFFICULT TO REACH THAT COMPREHENSIVE TRADE AGREEMENT. IF YOU ' RE THINKING ABOUT A MEMORANDUM OF UNDERSTANDING, WE KNOW THAT WORD IS FORBIDDEN AT THE WHITE HOUSE, OR IF YOU TALK ABOUT A HANDSHAKE DEAL, THAT IS MORE LIKELY WITH PROMISES THAT CHINA WILL IMPORT MORE FROM THE U.S. AND WORK TOWARD A STABLE CURRENCY AND WON ' T VIOLATE INTELLECTUAL PROPERTY RIGHTS. THAT WOULD BE A HANDSHAKE DEAL, AND WE KNOW HOW THOSE GO. TAYLOR: WE HEARD MIXED TALK ABOUT THIS PERHAPS LEADING TO A WEAKER DOLLAR. THAT WAS A BIG TOPIC OF CONVERSATION WITH JAY POWELL. > > THE STRONG DOLLAR IS NOT NECESSARILY ABOUT TO DISAPPEAR. THE FED IS LEADING THE CHARGE IN TERMS OF DOVISHNESS AROUND THE WORLD, BUT WE SEE OTHER CENTRAL BANKS FOLLOW THE FED. I DON ' T BELIEVE THERE WILL BE MUCH WEAKENING AND THE DOLLAR AHEAD. I THINK THE DOLLAR WILL STAY RELATIVELY STRONG IN THIS ENVIRONMENT, WHICH IS ONE OF THE FACTORS THAT HAS CONSTRAINED INFLATION. WE DON ' T SEE MUCH UPSIDE TO INFLATION FROM WHERE WE ARE IN THE U.S., GIVEN CYCLICAL OPPONENTS, GIVEN THE TRADE-OFF BETWEEN UNEMPLOYMENT AND WAGE GROWTH.

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U.S.-China Tension Impedes a Comprehensive Trade Deal, Economist Says

Gregory Daco, chief U.S. economist at Oxford Economics, discusses the potential roadblocks to a comprehensive trade deal between the U.S. and China and what trade means for U.S. inflation. He speaks on "Bloomberg Surveillance." (Source: Bloomberg)

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