US: Trump could be overestimating his leverage - Nomura

Analysts at Nomura believe that there is a risk that President Trump may be overestimating the economic leverage the US has with China over trade by relying too heavily on data on the trade in goods with China.

Key Quotes

“We see at least five reasons why that leverage may be overstated:

1. The US enjoys a trade surplus with China in services.

2. The US holds a $34.8bn trade surplus with Hong Kong.

3. The trade deficit in goods with China is about one-half less in value-added terms.

4. US multinationals have more assets at risk in China than Chinese companies have in the US.

5. China’s holdings of US USTs and agency securities could be $1.5trn (higher than frequently reported) with Hong Kong holding another $194bn.”