Donald Trump says there’s a media conspiracy afoot.
Amid spiraling tensions with China that now look set to dead end in a global currency war, the president has been at pains to keep the narrative from falling apart as the media latches onto the likelihood of rising consumer prices in the next prospective round of tariffs.
It will be impossible for the USTR to avoid consumer goods going forward, and you’re reminded that contrary to the administration’s rhetoric, the tariffs have, in fact, raised prices.
Meanwhile, the media has also picked up on the fact that contrary to the notion that China is engaged in an effort to “manipulate” the yuan lower, Beijing has actually gone out of its way to prop up the currency over the past six or so months.
Peter Navarro was pressed about both of these issues in multiple high-profile television cameos last week and, for lack of a better way to describe things, he folded up like wet cardboard under pressure from, in order, Chris Wallace, Maria Bartiromo and Sara Eisen.
“Through massive devaluation of their currency and pumping vast sums of money into their system, the tens of billions of dollars that the US is receiving is a gift from China”, Trump sad on Tuesday, his tone somewhat desperate, to the extent one can infer “tone” from a tweet.
As ever, that isn’t true. There is no sense in which a falling Chinese yuan equals a giant paper check made out to Trump, but his base isn’t likely to know the difference, so the bombast continues apace.
Additionally, China is not, in fact, “pumping vast sums” of money into the system. Yes, Beijing has slashed RRR on numerous occasions, but the latest credit growth data out of China for July was a disappointment to markets to the extent it suggest China is not, in fact, “pumping vast sums” into the economy. Total social financing for July came in at just 1.01 trillion yuan, missing estimates (1.63 trillion) by a country mile.
Trump continued on Tuesday, by arguing that prices aren’t going up despite the fact that they clearly are for tariff-affected goods (see the charts above).
“Prices not up, no inflation”, the president said.
Data from the BLS on Tuesday showed core CPI running the hottest in six months, and the MoM print was another 0.3% scorcher.
Finally, Trump made the absurd contention that farmers are somehow better off being bailed out by the government than having access to China’s vast markets.
“Farmers getting more than China would be spending”, the president said, on the way to claiming that everyone would know that except that the “Fake News won’t report!”
The “fake” news “won’t report”, because it’s patently ridiculous.
“It should be noted that many of these trade war stories about America’s hurting farmers are paired with stories about these farmers sticking with Trump — for now”, Tufts professor Daniel Drezner wrote Tuesday, adding the following rather poignant critique:
Still, it is impressive how this allegedly conservative government has inverted the relationship between the state and the private sector. In an ideal world, the government provides public goods that enable private producers to be even more productive than they were before. The Trump administration has permanently weakened the traditional public good of scientific information and eviscerated the most important export market for these producers. To make up for this, the administration is essentially providing welfare checks to affected farmers.
Last week, the National Farmers Union and the American Farm Bureau Federation both lamented Trump’s tariffs and the effect the trade war is having on US agriculture. “President Trump’s strategy of constant escalation and antagonism isn’t going to resolve China’s unfair trading practices”, union president Roger Johnson said. “In fact, it has just made things worse”.