China trade

Danger! Chinese Media Says Scrapping December Tariffs Not Good Enough For ‘Phase One’ Trade Deal

"Sources in Beijing informed the Global Times"...

"Sources in Beijing informed the Global Times"...
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5 comments on “Danger! Chinese Media Says Scrapping December Tariffs Not Good Enough For ‘Phase One’ Trade Deal

  1. Don’t worry, I heard Larry Kudlow say that everything will be fine. So we have that going for us … which is nice…

  2. Trump probably sees unilaterally postponing the Dec 15 tariffs as weakness. That would be correct. He is in a weak position.

    Xi and the markets have Trump in a position that imposing the Dec 15 tariffs, or failing to roll back the previous tariffs in reasonably short order, will very likely trigger a meaningful market slide, which will hurt Trump more as the election gets closer.

    So the pressure on Trump is rising and he will either cave to avoid the slide – or miscalculate and trigger it. Either should be fine with Xi, either he effectively wins the trade war or he gets rid of Trump.

    I think the relatively greater weakness of Chinese economic data compared to the US data is somewhat irrelevant, to figuring out what will happen. Xi should be pretty unconcerned about China’s current economic travails. They are very far from significant enough to affect his hold on power even a little bit.

    Why be deterred by domestic pork prices when he is very close to inflicting a major defeat on the US? Arguably no other country’s economy can withstand two years of “trade war” attacks from the US, so he’ll have proven that the Chinese economy is at some sort of parity with that of the US. And he may succeed is getting rid of a President who, while he has helpfully inflicted great harm on US global interests, is possibly becoming more trouble than he’s worth from Xi’s point of view.

    I think the Chinese will continue to insist on complete or near-complete tariff rollback while offering only a routine level of agricultural purchases and some fairly meaningless talk about IP. Trump is gonna have to cave or blow up. Attention should turn back to whether Powell will then resume caving to Trump.

    • I tend to disagree

      I think Trump can easily weather dissatisfaction with the electorate now. He’ll have plenty of time to roll back tariffs in the spring to launch a rally into election season

      Arguably, the market is rallying too early now to be of much benefit to Trump a year from now.

      • Suppose he fails to make a deal before then, merely postpones the Dec 15 tariffs in return for no real Chinese concession, so tariffs and uncertainty continue for another 4-5 months. Seems negative for economies and the markets. Then suppose in spring he wants to roll back tariffs to launch a timely rally. He will have to get Chinese concessions to do that without seeming to surrender. At that point, his position is even weaker – it gets weaker as the election approaches.

  3. It is all just a game to trump. Sad because some people are being hurt. But as always it is about trump and how he stays in power. And his base either can’t see it or doesn’t care. And the market doesn’t force him to do the right thing (yet?). And the Fed inadvertently enables him. It is seriously a joke to run a country like this.

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