On Thursday afternoon, U.S. stocks dipped when Donald Trump said the following about the prospects for a quick resolution of the ongoing trade spat with Beijing:
There’s a lot to unpack there, or actually not really, because let’s face it, most of that is lies and what isn’t lies is just senseless rambling, but the headline grabber was the bit at the end about “doubting” whether trade talks are going to be successful.
That’s probably some semblance of true because while the administration has, at various times, attempted to communicate what exactly it is they want China to do in order get back in Trump’s good graces, it’s not entirely clear whether anything is going to be good enough precisely because this whole charade is at least partially designed to bolster the GOP ahead of the midterms and thus not entirely aimed at finding a “resolution” to the “problem”.
This is complicated immeasurably by the fact that the “problem” itself is very often couched in rather ambiguous terms. For instance, Trump likes to talk about America being “raped” by the Chinese, and while “raped” is a well-defined term when used in the context of sexual assault (something Trump allegedly knows a thing or two about), it’s not quite as clear-cut when it comes to international commerce. Here’s what I mean:
What exactly does that mean? Well, it means whatever he wants it to mean and if the ZTE ordeal is any indication, how angry he is about being “raped” depends in part on whether there’s $500 million involved.
This situation is also complicated by the involvement of Peter Navarro who reportedly got into a shouting match with Steve Mnuchin in Beijing and who is now living under the cloud of rumors that he’s being sidelined in negotiations with Chinese Vice Premier Liu He.
You might recall that one of the demands the U.S. made earlier this month involved China slashing the two countries’ trade deficit by $200 billion by year-end 2020. Well according to Reuters, China suggested they’d be willing to go along with that. To wit:
China has offered U.S. President Donald Trump a package of proposed purchases of U.S. goods and other measures aimed at reducing the U.S. trade deficit with China by some $200 billion a year, U.S. officials familiar with the offer said.
The offer was made during U.S.-China trade talks in Washington aimed at resolving tariff threats and other trade irritants between the world’s two largest economies, but it was not immediately clear how the total value was determined.
But again, that’s not likely to matter because Trump’s demands are something of a moving target and involve attempting to curtail Xi’s “Made in China 2025” plan – that’s probably going to be a non-starter for Beijing.
And the other thing here is that you have to know Trump already had the $200 billion offer in hand when he made the comments about “doubting” that a deal was possible. After all, if Reuters became aware of it by 5:45 pm, then you damn well know Trump was aware of it at 2:45. So it doesn’t sound like he really wants a quick resolution.
Who knows, but what we do know is that according to Robert Lighthizer, those “other” trade talks aren’t going great….
LIGHTHIZER: NAFTA COUNTRIES `NOWHERE NEAR CLOSE TO A DEAL' pic.twitter.com/fZOmIytcd4
— Heisenberg Report (@heisenbergrpt) May 17, 2018
