Donald Trump is ready to “take a stand”, ok?
In an effort to perpetuate the manifestly false narrative that his trade war not only makes sense, but is in fact necessary, the President delivered some characteristically absurd comments late Thursday in an interview with Fox News that found Trump saying the following about his increasingly bitter dispute with Beijing:
It’s time to take a stand on China. We have no choice. It’s been a long time. They’re hurting us.
At this point, it’s entirely possible that Trump actually believes his own propaganda. There’s also a sense in which this has become a self-fulfilling prophecy. China really is “hurting us” now, and that’s thanks in no small part to Trump having backed Beijing into a corner, forcing them to retaliate to escalation after absurd escalation, with consequences for the U.S. farm belt (among other key constituencies).
On Thursday, Goldman described just how aggressive the administration has been when it comes to proposing and implementing tariffs. “For previous rounds and tranches of tariffs it has taken about 10-12 weeks between when the Administration has formally proposed tariffs and published an initial list before the tariffs actually take effect”, the bank wrote, in the course of raising their subjective probability of Trump going all in, taxing everything Chinese imports to the U.S., to 60% by Q1 2019.
Trump’s comments to Fox came hours after news that the administration has not put in place a process for exemptions for U.S. companies when it comes to the new round of tariffs on $200 billion in Chinese goods. The rationale: The higher tariff rate of 25% doesn’t go into effect until 2019, so companies have three months to find new suppliers. The upshot there is that Trump is perhaps more serious than anyone imagined about actually rewriting the history of global trade and commerce. He is now attempting to force U.S. companies to upend their supply chains.
Meanwhile, the U.S. is now challenging China’s WTO request to slap sanctions on Washington in connection with a long-standing dispute over the latter’s use of “zeroing”, a practice that’s been ruled illegal by the WTO. Last month, the U.S. missed an August 22 deadline to comply with those rulings.
A little over a week ago, a schedule of the WTO’s dispute settlement body showed China was prepared to ask for authorization to apply sanctions on September 21 or, more to the point, on Friday.
Read more on the WTO case
Well, the Trump administration predictably objected today as Beijing pushed the issue, requesting permission to slap $7 billion in retaliatory measures on America for Washington’s recalcitrant attitude towards what certainly seems like settled precedent on the application of weighted average-to-transaction methodologies.
Now, the dispute will be referred to WTO arbitration, which will make a decision on what’s allowed in terms of retaliation later this year or early next year. That sets the stage for the WTO to render an unfavorable judgment against the U.S. just as Trump is raising the tariff rate on $200 billion in Chinese goods to 25% from 10% and just as the President goes all in by implementing levies on an additional $267 billion in Chinese imports.
A WTO ruling in favor of China on the “zeroing” dispute would only add to the tension and would likely give Trump an excuse to pursue his long-standing goal of pulling the America out of the WTO altogether.
Sounds good, right?
Read more on Trump and the WTO: