Trump Tweets on China Roil Markets
Overnight Sunday, Dow futures dropped over 500 points after China indicated it might cancel the next round of trade talks, following Trump’s tweets, saying:
“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods.”
“These payments are partially responsible for our great economic results (sic). The 10% will go up to 25% on Friday. 325 Billions Dollars….”
“….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%.”
“The Tariffs paid to the USA have had little impact on product cost, mostly borne by China (sic). The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”
Comments like the above show a president unfit to serve, lots more evidence proving it — unrelated to the witch-hunt Russiagate House, Senate, and Mueller probes.
Trade wars assure losers, not winners. Major Sino/US bilateral differences are over structural issues, the US trade deficit with China a minor one by comparison.
The Trump regime aims to curb China’s goal of becoming a global economic, industrial, and technological powerhouse, challenging US dominance. That’s what the trade war is largely about.
Beijing is willing to compromise on lots of issues, not its fundamental longterm aims. Its authorities won’t agree to unacceptable demands.
Multiple rounds of talks failed to resolve key issues. An end of March deadline for resolution long ago passed, Trump unwilling to meet with China’s Xi Jinping unless a deal is reached.
His above-quoted tweets aim to get China’s negotiators to bend to the will of their US counterparts. In recent weeks, remarks by Trump regime officials suggested mutual agreement was close.
Clearly major differences remain unresolved. Trump’s tweets came days before Chinese Vice-Premier Liu He’s scheduled visit to Washington for more talks.
If DJT follows through on his threats, tariffs may be imposed on all Chinese imports, roiling markets further, along with delivering another body blow to weakening US economic conditions.
Record high US equity valuations are unrelated to the domestic economy. Paul Craig Roberts explained they reflect stock buybacks by companies to inflate prices, instead of reinvesting profits in plants and equipment — “(t)he sign of a good economy,” absent in the US.
In his latest update on economic conditions, economist John Williams said the “INITIAL FIRST-QUARTER 2019 GDP ESTIMATE WAS NOT CREDIBLE — downturn has just begun; recession remains in play,” adding:
“As US economic activity turns increasingly negative, so will the stock market and the US dollar.” He noted “sharply deteriorating retail sales, housing starts, manufacturing and freight activity…signal(ing) pending contraction in real” GDP.
“Income dispersion is worst since before the 1929 stock market crash and Great Depression.” What Williams reported is not a pretty picture. High equity prices reflect unrealistic optimism, speculation, and corporate America buybacks.
The bubble economy won’t last. They never do. How this one deflates remains to be seen. Like every time before, ordinary people will be hurt most, especially if hard times are protracted.
The day before Trump’s Sunday tweets, China’s Global Times said if Beijing’s “policymakers react like their US counterparts, a new Cold War may soon take shape,” adding:
If the Trump regime “carries out forcible containment against China (or other hostile actions), then China has no other option but to take all necessary countermeasures.”
Despite Trump’s weekend threats, a Sino/US trade deal is likely — though much later than both sides aimed for and without resolving major irreconcilable differences.
Given US rage to marginalize, contain, and isolate China along with Russia, a foolhardy strategy, belligerent confrontation with one or both countries is ominously possible ahead, maybe inevitable.
My newest book as editor and contributor is titled “Flashpoint in Ukraine: How the US Drive for Hegemony Risks WW III.”