The G20 summit in Japan is rapidly approaching. Twenty of the world’s most powerful leaders are set to meet to discuss issues including climate change, development, and the current status of the global economy. A minefield geopolitical landscape in 2019 has been fraught with many perils, but no one issue has caused as much turmoil recently as the US-China trade spat. President Trump is fighting not just for a reduction in the USA’s trade deficit, but for seismic changes in China’s industrial policy. The inability of both countries to find a compromise has resulted in a tit for tat multi-billion dollar tariff battle that is dampening investor confidence. Worse yet, global growth concerns are frightening off both retail and institutional investors. This fear has resulted in a share purchasing exodus and bitter sentiment toward other risk-averse investments. Instead, portfolios are increasingly being geared toward defensive asset classes like bonds. Negative fundamental and technical indicators are pointing toward the imminent end of the longest bull market in history. However, the upcoming Trump-Xi meeting could be a watershed moment for the global economy. A positive outcome could breathe life into exhausted markets.

The World Trade Organisation (WTO) has estimated that since trade war impositions were enforced late last year, $335.9 billion dollars of goods have carried additional duties. The WTO’s Director General, Roberto Azevêdo, said this staggering tax sum “should be of serious concern for the whole international community; we urgently need to see leadership from the G20 to ease trade tensions and follow through on their commitment to trade and to the rules-based international trading system.” Trump is allegedly ‘comfortable with any outcome’ through U.S. negotiators are apparently willing to suspend the next phase of Chinese tariffs. Another step in the right direction is that Chinese Vice Premier Liu had a phone conversation with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin, during which they agreed to maintain communications.

Wall Street is stagnant in anticipation for the looming talks set to take place at the end of the week. Should trade talks regress again and hostilities escalate, recession fears would erupt. UBS predicts that further aggravation would plunge global equities upward of 20%. In addition to this, GDP expectations would be drastically downgraded. The Federal Reserve would almost certainly be forced to cut interest rates in this scenario. Despite the gloomy predictions by economic pessimists, an eventual deal between China and the U.S. is a foregone conclusion. While specific outcomes are unclear, both parties are in dire need of a deal. China’s disastrous PMI data, coupled with Trump’s stock market dependence in his 2020 re-election campaign, signal an eventual resolution.

The G20 was originally created to respond to the global financial crisis, but today looks to fostering actionable growth strengthening plans. This year’s trade and investment keynote theme is already and will continue to garner significant attention from around the globe. International trade is an engine of growth, productivity, and job creation. This event will focus on current transnational trade developments, bilateral agreements, the digital economy, and attempt to resolve any present disputes.

While both sides are demanding sizeable concessions, Steven Mnuchin is confident that ‘we are about 90% of the way’ on the China deal and that there’s a ‘path to complete this’. Despite the acid-tongued language both parties have used against each other, an amicable solution is still very much achievable.