You’d be forgiven if you were having trouble figuring out what Donald Trump is “all about” these days, because as we were pretty keen on pointing out Thursday evening, he’s not so sure himself anymore:
trump summing up this month so far… pic.twitter.com/SBWf5Z7zMl
— Walter White (@heisenbergrpt) April 5, 2018
Agreed, Mr. President. Agreed.
Of course that clip is taken out of context for maximum humor, but the truly amusing thing about it is that if you actually go back and view it in context, it’s even crazier because he’s talking about Mexican rapists at a tax roundtable.
Anyway, Trump was on WABC Radio’s “Bernie & Sid in the Morning’’ program on Friday to “explain” what the likely fallout from the China trade spat will be and here’s what he had to say:
I’m not saying there won’t be a little pain. So we might lose a little of it but we’re going to have a much stronger country when we’re finished, and that’s what I’m all about.
And see, here I thought he was “all about” never “losing.”
Whatever the case, China is pretty goddamn sure America is going to “lose a little” too if the administration keeps pushing the envelope. Take these excerpts from a Xinhua commentary out this morning for example:
It seems Washington is betting that Beijing might eventually back down in a trade tit-for-tat if it continues to serve up tariff threats against Beijing. Not so.
The Trump administration threatened on Thursday to slap tariffs on 100 billion U.S. dollars’ worth of imports from China. The move came only days after the U.S. Trade Representative (USTR) proposed to levy an additional 25 percent tariff on 50 billion dollars’ worth of China imports.
The United States is not short of intelligent economists, yet it appears that Washington is losing common sense on global trade, and trade relations with China, its largest trading partner for merchandise.
Yes, the U.S. is “losing common sense.” Obviously, all of these “commentaries” from Chinese state media are pure, unadulterated propaganda (more here), but one thing you should note is that this is what happens when someone as crazy as Trump is allowed to make important decisions: silly foreign propaganda starts to sound some semblance of sane by comparison.
Well if you were wondering what Goldman thinks about the latest salvo from the Trump administration, they’re out with something new on last night’s news. To wit:
Imposing tariffs on another $100 billion in goods would be much more disruptive than the initial round not just due to the larger amount of goods affected. In developing the list of $50 billion in products to be targeted for tariffs that was released on April 3, USTR explicitly targeted products where alternative country sources were available—i.e., where China makes up a small share of total imports—so that affected Chinese imports could be easily replaced with imports from other countries to minimize the impact on US consumers. The challenge the White House faces is that as the overall amount of imports targeted increases, a greater share of imports in the affected categories is likely to come from China and it would be harder to import sufficient amounts from other countries without a meaningful price increase.
The latest announcement of another $100 billion in tariffs creates a more binary outcome, in our view. We expected the first round of tariffs to take effect, albeit covering a smaller amount than the $50bn proposed earlier this week. The much greater negative effect on consumers that $150 billion in tariffs would have suggests that the odds of any of these tariffs taking effect is somewhat lower than it had seemed previously and that the White House is likely negotiate to avoid them. However, in the lower probability event that tariffs are imposed, this would have much more substantial economic effects than the initial proposal would have.
They go on to take up the issue we and others flagged this morning – namely that China would be out of simple options if Trump upped the ante to $150 billion in total tariffs, because that would exceed U.S. goods exports to China:
That opens the door to other, more destabilizing responses.
“In 2017, the US exported $131 billion in goods to China and imported $506 billion [so] if the US were to impose tariffs on an additional $100 billion on imports, taking the total to $150bn, China would be unable to respond fully through retaliatory tariffs as there are simply not enough US exports to retaliate against,” Goldman writes, before going on to warn that this is where things get interesting:
However, China would have other means of retaliation. Although China would be unable to fully retaliate through tariffs on goods in the event that the White House imposed sanctions on $150 billion in imports, Chinese policymakers could take other steps to retaliate.
- a currency depreciation could be used to offset some of the effect of tariffs.
- Chinese authorities could sell some of its large official-sector holdings of US Treasuries, which would lead to a tightening of US financial conditions.
- Chinese authorities could limit access for US companies to the Chinese domestic market, particularly in the services sector, where the US exports $56 billion in services annually and runs a $38 billion surplus.
There you go. We are getting ever closer to the edge here and I guess what it seems like people are underestimating is Trump’s propensity to push us over.