Donald Trump waited until after the closing bell sounded on Wall Street to announce his response to China’s retaliatory tariffs.
That’s not a coincidence. US stocks plunged on Friday, and the steep losses pushed the S&P to a fourth consecutive weekly decline.
The nightmare session was almost solely attributable to the president’s tweets, which, among other things, equated the Fed chair with a Communist autocrat and commanded US businesses to immediately find new suppliers.
Read more: On Wall Street, A Summer Meltdown
Once the dust had settled for markets, Trump opened his Twitter app to hit back at China for hitting back at him. And yes, that’s how absurd this has become – Trump is now retaliating to Beijing’s retaliations, proving beyond a shadow of a doubt that an “eye for an eye leaves everyone blind”.
Trump, demonstrating a flabbergasting inability to take responsibility for the consequences of his own actions, claimed Beijing is treating him unfairly by retaliating to the new tariffs he put on the country’s imports. “China should not have put new Tariffs on 75 BILLION DOLLARS of United States product”, he said, calling the new levies from Beijing “politically motivated!”
“Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%”, Trump said.
Just to recap, he’s referring to the goods that were taxed at 10% from September 24, 2018. Those goods were set to be taxed at 25% from January 1, 2019, but the Buenos Aires truce prevented that escalation. Then, on May 5, Trump broke that truce, ratcheting the rate to 25% in a late-night tweet that paved the way for stocks to fall nearly 7% that month. Now, thanks to China’s decision to retaliate to Trump’s new, 10% tariff on a separate list of goods, the rate on the list of goods which was originally taxed starting a year ago next month, will be 30% instead of the 25%, starting a month from September 1, when tariffs on the new list of goods (minus those consumer goods which are exempt until December 15) will take effect.
If that sounds wholly ridiculous to you, that’s because it is. And that’s not even the end of it.
“Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%”, Trump continued.
The rationale for all of this is as follows:
For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight. Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship.
The irony in Trump calling China a “great burden on the US taxpayer” is almost too much for rational people to bear. Tariffs are taxes on US consumers, and low-cost imports from China have been a massive windfall to those same consumers for years.
Trump is right about one thing, though. There truly is “no end in sight” to this charade and in case you haven’t noticed, that’s just fine with China.
The president finished up his Friday afternoon announcement as only he would.
“Thank you for your attention to this matter!”, he said.
It wasn’t clear who he was talking to.
What was equally concerning today though was the market reaction to China tariffs and the subsequent Powell speech. Tariffs and now outright trade bans and barriers, are a whole different level of threat regardless of projections to GDP impact or earnings that some banks love to underestimate, and cuts a complete different kind of relief to the pain that tariffs are causing. The two surely can’t be treated the same in terms of news impact, at least a normal human would not. But it seems there are no humans left in any of the trading desks, or maybe they are all gathered trading and watching the bond market to care what equities do. Stocks recovered almost all the loses from tariff announcement which was completely bonkers, not only did the algos bid the futures markets in the US, they actually started bidding HK futures as well, while it was certain that trump will retaliate to the retaliation if not today then during the weekend, and HK markets on monday would be the most vulnerable. I don’t remember a time in all my years where markets where this complacent and wilfully stupid. A soulless market without any meaningful feedback, algos catch a headline and trade it. Today was equal to algos catching a headline that some nuclear warhead was headed straight at them, but decided to buy once Powell said nothing and decided to cut interest rates in September. It’s crazy. But hey…Thank you for your attention to this matter…Goodness gracious, a half resuscitated donkey, an imbecile, a dangling testicle controls the fate of the world practically.
The Xi administration’s strategy here is quite obvious. They set the news to break as Powell was going to speak and Trump was heading to the G7, knowing that Trump would over react and put himself into an impossible position. High fives in Beijing. Now we get to watch as he screeches and attempts to weasel his way out of it.
You would think 2/3rds of Congress would be corrupted enough by multinational corporate donors to wrest control of tariff policy away from Twitter like the Founders intended.
Trump must have lost Jamie Dimon’s telephone number.
I can hardly wait for Trump’s message to the G7:
“Hey, you guys and gals (original was “stupid socialsits”), don’t lower those interest rates ! ZIRP and negative rates just don’t work !
This is going to get a lot worse before it gets better. The question is: Does Trump exit gracefully or does he get the bum’s rush like the Homer Stokes character in “Oh, Brother, Where Art Thou?’
Is Mitch on drugs?
@PaulMiller: right on spot, you even got the wrong spelling right – chapeau!
@mfn: Never has he ever done anything “gracefully”. One can only assume that’s not gonna change
He forgot the H in ‘sits’.