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China trade Trump

‘China Could Be A Little Bit Upset’: Trump Ready To Slap Xi With Tariffs As Soon As Friday

"They understand what we are doing."

Ok, so everyone made it through the Fed alive – even emerging markets.

I guess there’s a sense in which the China tariffs news actually helped, to the extent it softened the blow for EM from a hawkish Fed by weighing on the dollar.

You’ll recall that just a little over a week after Steve Mnuchin agreed to a truce with Beijing on trade, reports suggested Trump would be moving ahead with tariffs on Chinese goods anyway. That news came just hours ahead of the White House refusing to renew temporary waivers on metals tariffs for U.S. allies.

The trade spat with China took a backseat to the G-7 summit and was similarly overshadowed in the news cycle by the Trump-Kim meeting, but on Wednesday  afternoon it was back, when WSJ reported the following:

The Trump administration, deepening its global trade offensive, is preparing to levy tariffs on tens of billions of dollars of Chinese goods in the coming week, perhaps as early as Friday—a move that is likely to spark heavy retaliation from Beijing.

Senior trade officials in the White House, the Commerce and Treasury departments and the U.S. Trade Representative’s office met on the issue before President Donald Trump went to a summit of the Group of Seven industrialized nations in Canada on Friday—and agreed that the U.S. should proceed, said U.S. officials and others briefed on the talks.

Mr. Trump hasn’t given his final approval and could have second-thoughts about applying heavy pressure on China, the officials said, particularly because the U.S. wants Beijing’s cooperation in its efforts to get North Korea to give up its nuclear weapons. Mr. Trump returned to Washington on Wednesday morning after meeting with North Korean leader Kim Jong Un in Singapore.

That hit shortly after the Fed decision and it served to dampen the dollar’s enthusiasm.

The greenback rallied sharply on the FOMC’s hawkish lean and accompanying shift in the dot plot, but gave it all back following the China headlines:

DXY

To be sure, that tariff news isn’t exactly “new”, per se, but the WSJ piece would appear to be confirmation of everyone’s worst fears when it comes to whether Trump is still inclined to push the issue with Xi.

“China could be a little bit upset about trade because we are very strongly clamping down on trade,” Trump told Fox News’s Bret Baier in an interview held on Tuesday aboard Air Force One following the Kim summit in Singapore.

“You will see over the next couple of weeks. They understand what we are doing,” he added, before underscoring the notion that he still has a great relationship with his “friend” Xi (after all, friendships forged over giant pieces of chocolate cake don’t just crumble over some silly tariffs).

Remember: Trump still needs China when it comes to ensuring that the North Korea situation evolves amicably.

Who knows, maybe there was a behind-the-scenes quid pro quo. Something like this: “You agree to stop those joint military drills with South Korea and we’ll let you get away with some of those tariffs.”

As the President would say: “We’ll see what happens.”

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1 comment on “‘China Could Be A Little Bit Upset’: Trump Ready To Slap Xi With Tariffs As Soon As Friday

  1. well we got couple of market opens coming up.
    it appears at first blush rates are squeezing up a bit.
    we will see what happens am usa.
    here is the thing i think about most.
    the fed is going to try to inflate away debt.
    making rich richer and banksters richer.
    the middle class in the usa will all be gone, well what’s left of them. two distinctive classes–very rich and very poor–whoops let’s not forget the ones that survive on .gov dole. i doubt this is a good thing.
    i truly believe this is being done on purpose by .gov/fed.
    the end result will be the same–very bigly badly.
    i wonder if i will survive–hmmm.
    good luck to all and i do thank the 1% for providing me with a job.
    good luck to all and thanks again Mr. H. for all your hard work.
    sb

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