‘Look, This Isn’t A Surprise To Anyone’: Nomura’s McElligott Weighs In On Latest US-China Trade ‘Scoop’. Also Comments On Fed
One person who seems to generally agree with our contention that nobody ever really believed Donald Trump would succeed in striking a comprehensive trade deal with China (where that means Beijing acquiescing to a wholesale rethink of their economic model) is Nomura's Charlie McElligott.
Early Thursday, Bloomberg reported that Chinese officials are privately expressing doubts about whether an all-encompassing agreement with the US is feasible. That, we suggested, is in line with how the "rest of
We’ve talked before about the Chinese side of this game.
Trump’s core demands of fundamental change in China’s economic/political system were always non-starters. I think China has known for some time that Trump is unreliable, impulsive and weak, and that the chances of getting any deal approved by Congress in Trump’s first term are poor. Now China probably sees him as under high political pressure, in need of some/any “win”, and at significant risk (50%?) of being deposed in Nov 2020.
If you can’t get an acceptable, durable and binding deal with someone, the next best thing is to run out the clock.
That is, I think, what is going on. China wants to buy US ag commodities (pork and soy), and will use that as a carrot to delay further tariffs and maintain access to US tech.
The US side of the game is harder to figure out.
Maybe Trump wants big tough tariffs to fire up his base, and figures he can keep farmers happy with more aid. Maybe he figures the best way to get a stock rally is by forcing the Fed to resume cutting. That might suggest a hardline position. Or maybe he figure an ag buy-for-tariff delay deal can spun as a big win, and ignite a stock rally sooner than he can force the Fed’s hand. That might suggest a concliatory position. Hard to figure out.
Why don’t we all just let the “massive brain, world’s best intellect and better than any at negotiating deals” make it happen. He doesn’ need our help. Errr, Oooops 🙂
Trump still has some time till the election. He will raise tarriffs in December and lower them next year, closer to the election, in exchange for China buying ag products.
Yeah, maybe, but he’ll still be a loathsome, insufferable clown.