An errant headline from Fox served to shake already fragile market sentiment on Tuesday, although it’s not clear traders learned anything new.
“Trade sources tell me the Dec 15th tariffs on basically the rest of what China imports into the US are still going forward as of today”, Edward Lawrence said, in a tweet. “I was told the caveat is if Phase One trade deal gets on paper or something else positive happens President could choose not to impose tariffs”.
That tells us exactly nothing.
Clearly, Trump isn’t going to pre-announce a possible announcement around canceling the December 15 escalation. The whole idea is to use that self-imposed deadline as leverage. That escalation has been on the calendar since August 13, when the administration split the new tariffs (initially announced on August 1) into two tranches, one effective from September 1, the other from mid-December.
The point being: Nothing has changed here.
Well, that’s not entirely true. What’s changed is that Trump has seemingly gone back on offense this week, and on multiple fronts, challenging LatAm, Europe and, maybe, China to more tit-for-tat protectionism. That renewed aggression produced one of the worst three-day slides for US equities of the year.
Earlier this year, the administration pondered putting China’s corporate crown jewel on the Treasury’s Specially Designated Nationals list, an inflammatory move that could have crippled the company well beyond the Commerce department blacklisting.
Huawei would have had the dubious distinction of being added to a list that, at various intervals, has included Iranian officials, Rusal and Venezuelan drug kingpins.
“Officials drafted a memo and held interagency meetings on the issue… showing the extent to which administration officials mulled deploying the United States’ most aggressive sanctioning tool against the Chinese company”, Reuters said Tuesday, citing sources, who also indicated the plans could still be dusted off if relations between Washington and Beijing were to deteriorate further.
It’s hard to overstate how significant such a move would be, so we won’t even waste anybody’s time elaborating on this until it gets closer to becoming a reality.
The bottom line is that if the administration were to go this route, Huawei couldn’t settle business transactions in US dollars. That pretty much tells you everything you need to know.