The trade war between the world’s two largest economies entered its 18th month in September with the U.S. imposing fresh 15 percent tariffs on $125 billion worth of goods imported from China. China retaliated in kind, but a breakthrough could happen sooner rather than later. According to reports, trade representatives from both countries have agreed to hold new talks in early October, and there’s optimism that this could be “the one.”

“China and the U.S. announced new round of trade talks and will work to make substantial progress,” Hu Xijin, editor-in-chief of the Global Times, tweeted on Thursday. “Personally I think the U.S., worn out by the trade war, may no longer hope for crushing China’s will. There’s more possibility of a breakthrough between the two sides.”

CNBC writes that Hu has been spot on with past developments in the ongoing trade war. Many Wall Street traders follow him for insight on what could happen next.

One thing Hu is right about—the trade spat is wearing on the U.S. economy, especially manufacturers. The ISM manufacturing purchasing manager’s index (PMI), an important forward-looking gauge of economic activity, has been declining steadily for months now, and in August, it shrank for the first time in three years. The PMI stood at 49.1, down from 51.2 a month earlier, its lowest reading since March 2016.

U.S. Market has trended down alongside manufacturing growth
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Among 11 factors that the Institute for Supply Management (ISM) measures every month, only supply deliveries was still in expansion mode in August. All other factors, from new orders to employment to exports, were below the 50.0 threshold, indicating contraction.

Comments made by manufacturing executives “reflect a notable decrease in business confidence,” the report says.

This may not bode well for the domestic stock market, especially if the manufacturing sector continues to cool. In the chart above, you can see that the S&P 500 has been trading in tandem with the PMI. In August, the year-over-year percent change fell below 1 percent.