Remember how, two Fridays ago, Donald Trump told reporters in the Oval Office that more tariffs on China might not be necessary?
And remember how markets seized on those off-the-cuff comments to suggest that the administration’s trade stance had softened ahead of the G20?
If not, you can read our entire take on that episode in “‘Stupid People’: Here’s What Trump Really Said About The Trade War On Friday“, but suffice to say Trump was doing what Trump always does: riffing and rambling with no regard whatsoever for the fact that because he’s President, he should choose his words carefully.
Fast forward just 24 hours from those comments and Mike Pence was in Papua New Guinea trading insults with Xi Jinping, a sure sign that Trump’s ad hoc comments the previous day were just that: ad hoc comments.
Well sure enough, just days ahead of the G20, the Wall Street Journal has published new comments from Trump and they indicate that he has in no way, shape or form changed his stance when it comes to Beijing.
It’s “highly unlikely” that the U.S. won’t move ahead with the planned hike in the tariff rate on $200 billion in Chinese goods at the turn of the year, Trump told the Journal, in an interview. That effectively dashes hopes that Xi might convince Trump to delay the planned increase, which would take the rate on the $200 billion in Chinese goods that were taxed at 10% from September 24 to 25% starting in 2019.
Further, Trump said this about the prospect of tariffs on the remainder of Chinese imports:
If we don’t make a deal, then I’m going to put the $267 billion additional on at a rate of either 10% or 25%.
So, there you go. “No weakness“, I suppose.
USDCNH snapped higher on the headlines, underscoring market sensitivity to these tape bombs.
And it gets better – or worse, depending on how you want to look at it. Trump also suggested that he might just slap tariffs on iPhones from China. Consumers, Trump says, “could stand it.”
This comes at the worst possible time for shares of Apple, which are under siege from concerns about demand. The stock was immediately hit in after hours trading.
So, if you had high hopes for the G20, you might want to curb your enthusiasm, because “President T” doesn’t sound like he’s all that inclined to offer an olive branch to his “very good friend” Xi.