Trump stuff tantrum rolls on
Given the evidence of the last 72 hours, it seems President Trump has seriously underestimated the influence China’s government hardliners wield over his buddy President Xi Jinping when it comes to trade with the U.S. Trump contends Xi wants tariff détente with the U.S., but apparently, he can’t sell the deal back in Beijing.
Trump had no more received the bad news from his trade generals of China’s “unwillingness” to concede to U.S. demands in the ongoing tariff tantrum than he manifested his frustration/impatience by threatening to slap 10% tariffs on the remaining $300 billion in Chinese exports to the U.S. as of September 1. He also made clear if no deal is cut, he’d be disposed to jacking those new tariffs to 25%.
All of this while talks supposedly continue. “We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one,” the president tweeted, just after he announced the new tariffs.
Trump’s move means come September 1, nearly everything China sells to the U.S. will be tariffed, just so we’re clear. Companies importing ingredients and components from China won’t be able to eat the additional cost, so the consumer price of some goods and services will inevitably increase.
The Chinese acted just as quickly, with Xi not only ordering China’s state-owned import companies to cease buying just about all U.S. ag products, but immediately devaluing the Chinese yuan against the U.S. dollar, allowing the yuan to fall to its lowest level in 11 years. Trump trumpeted allegations of currency manipulation and worse.
Having the world’s two largest economies at each other’s throats is no good for anyone. U.S. ag suppliers, particularly soybean and pork producers, must endure weeks if not months more of blocked sales. And the longer the tariff wars continue, the less likely it will be U.S. producers will regain 100% of what they’ve lost.
China has gone hat in hand to Russia to ensure it has a fallback supplier for soybeans and other commodities. Trump is banging a new drum for a bilateral trade deal with Brazil, but that may mean negotiating with not only Brazil, but Argentina, Paraguay and Uruguay as the four nations comprise Mercosur, and that trade alliance says a deal with one must be a deal with all. Australia is on record complaining of the ripple effect of the U.S.-China showdown, and even the economically fragile European Union (EU) is beginning to feel the negative impact of the trade war.
Apparently, this is how it will be for the next several months, perhaps even through the 2020 general election. Trump speculates the Chinese are betting on his defeat next November. “They’ll pray that Trump loses and then they’ll make a deal with a stiff – somebody that doesn’t know what they’re doing – like Obama and Biden, like all the presidents before,” he told reporters last week.
The president believes he has the whip hand in the trade talks.
“The problem with them waiting…is that if & when I win, the deal that they get will be much tougher than what we are negotiating now…or no deal at all. We have all the cards!” he later tweeted. “China is trying to make a deal with me. But whether or not I’ll do it – it’s up to me. It’s not up to them.”
It’s all about the hardliners – both over there and right here at home.