Conflicting China Trade Comments Whipsaw Nervous Markets
China hinted it will take steps to counter new US tariffs set to go into effect on September 1, and nervous markets were not amused.
A short statement by the Finance ministry calls the planned levies a "serious violation" of the Osaka truce struck in late June. "China will have to take the necessary countermeasures", the ministry warned.
The curt remarks come less than 48 hours after Beijing and Washington seemingly joined forces to buoy markets. On Tuesday, China's Commerce ministry detailed
It looks like Trump backing down on a portion of the Sept 1 tariffs and pushing them to Dec 15 without any quid pro quo from the Chinese has emboldened the Chinese, who smell blood.
If this is the next phase of brinkmanship we may start to now see the Chinese acting in a belligerent, unexpected way. Deciding to out-crazy Trump might be a strategy. Could they decide that making the markets in the US tank by 25% may be the way to go. He may have the Art of the Deal, but they have The Art of War by Sun Tzu. They do however have some pretty big problems of their own, but an authoritarian society can have a lot more punishment on its people without worrying about losing power.
On the other hand that would let Trump off the hook for the coming recession, which he is now desperately looking to offload authorship of. Powell is his go to villain but I think Peter Navarro should be worrying about co-authorship credits, especially after his abysmal recent performances on the business networks.
The Chinese have now learned, like most of America’s Allies, not to trust Trump. Trump’s ‘walk-back’ was because the Chinese called Trump out for violating his ‘Gentleman’s Agreement’ with their Chairman.
The Chinese have alluded that:
1) They will retaliate;
2) It won’t be limited to tariffs.
As usual Trump overplayed his hand. He’s not in New York real estate any more.