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Mnuchin says "there is a path to complete" U.S.-China trade deal

Where China tariffs will hurt consumers

Treasury Secretary Steven Mnuchin said "there is a path" to the U.S. completing a trade deal with China, with his remarks on CNBC Wednesday coming ahead of President Donald Trump's meeting with China's Xi Jinping at the Group of Twenty Summit in Osaka, Japan, on Saturday.

As the trade talks approach, the U.S. is reportedly willing to hold off on levying the next round of tariffs on Chinese imports, which would target an additional $300 billion of Chinese-made goods, Bloomberg said, citing people familiar with the plans. 

Stocks are poised to open higher on Wednesday on word of the potential progress in a trade standoff that could affect nearly $1 trillion in commerce involving the world's two biggest economies, with the Dow pointing to a gain of about 100 points.

A trade deal with China would alleviate investor concern that the Trump administration's trade war will crimp corporate profits and create economic headwinds. If the U.S. moves forward with imposing tariffs on the remaining $300 billion of Chinese imports, world economic output could be reduced by 0.4% next year, Fitch Ratings said in a Wednesday research note. 

Still, Mnuchin expressed optimism about the potential for a deal in an interview with CNBC. 

"We were about 90% of the way there [with a deal] and I think there's a path to complete this," he told the cable network. "The message we want to hear is that they want to come back to the table and continue because I think there is a good outcome for their economy and the U.S. economy to get balanced trade and to continue to build on this relationship."

Ceasefire?

Still, not everyone is as convinced that the G20 Summit will result in a trade deal. It's more likely that the two sides will declare something of a truce, with both sides agreeing to hold off on tariffs or retaliatory moves as talks continue, Bank of America Merrill Lynch economists wrote in a Tuesday report. 

"A major deal seems quite unlikely given the big disagreements and the lack of motivating pressure from the markets," the report noted. "A truce would be a short-run positive for markets. But investors will likely start to worry unless we move toward a deal."

On CNBC, Mnuchin said he's "hopeful that we can move forward with a plan," adding that "President Trump and President Xi have a very close working relationship. We had a productive meeting at the last G-20."