Just when you thought it couldn’t possibly get any more ridiculous and petty, it does.
As painful as this is, I’m going to need to recap the history for you here (again) because you can’t really appreciate how absurd this has become unless you take a second to consider it in context.
If you were following along back in April, you’ll recall that Donald Trump was seemingly caught off guard by how quickly China responded after the USTR published the initial list of Chinese products subject to U.S. tariffs in conjunction with the 301 probe.
That was a real kick in the balls for Trump – especially the soybeans. Long story short, it was clear that China was aiming squarely at the GOP base in an effort to make voters feel the effects of Trump’s trade war ahead of the midterms.
“We view the inclusion of soybeans in [the] announcement as political in nature and reflective of the escalation of the trade dispute with the US. Soybean tariffs impact US Midwest political swing states and come at a cost that China appears willing to pay,” Goldman’s Damien Courvalin and Jeffrey Currie wrote at the time.
Trump was incredulous, but also furious. The next day, he lost his shit completely and ordered the USTR to consider “whether $100 billion of additional tariffs would be appropriate under section 301.”
In his statement, Trump called China’s retaliation “unfair” and it kinda seemed like the President was taking an overly simplistic approach to “winning” the war he started.
Specifically, Trump seemed to think that if he simply slaps more tariffs on Chinese imports than China can mathematically respond to, he’ll “win” by default. Something like this:
Well, things calmed down there for a while and late last month, Steve Mnuchin managed to strike what at the time seemed to be a game-changing truce with Chinese Vice Premier Liu He.
Then, Peter Navarro and Steve Bannon came out against the detente and the backlash from the isolationist contingent caused Trump to change his mind. Fast forward two weeks from that abrupt about-face and you land on last Thursday evening, when the White House confirmed that Trump would indeed be slapping $50 billion in Chinese goods with tariffs. In the wee hours of Friday morning, reports suggested that should China retaliate, Trump would go ahead and publish another list and subsequently make good on the promise mentioned above to take things all the way to $150 billion in total goods taxed.
Over the weekend, China reiterated its intention to respond in kind and according to reports, Xi is fully prepared to go “blow for blow” with what Chinese state media is describing as a “capricious Washington”.
Seemingly unable to contain himself, Trump has now ratcheted things up yet another notch, instructing the USTR to find him another $200 billion worth of shit to tax. And no, I am not kidding.
“I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent,” Trump said in statement, citing China’s recalcitrance (read: unwillingness to bow down).
Specifically, Trump says that as far as he can tell, Beijing “has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology”. Here’s the actual statement:
So that sets the stage for still more in the way of risk-off sentiment and it comes as China and Hong Kong reopen after a holiday.
While there’s still time for someone to swerve here, this game of chicken is looking increasingly like something that’s going to end in a head-on collusion. Oh wait, did I say “collusion”? I meant “collision”. Obviously.