Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
‘Great Progress’
US-China trade headlines will undoubtedly dominate the news flow in the days ahead.
"GREAT PROGRESS
I loved the lead picture. Looks to me like a “gotcha” grin. The self-confirmed Chinese cultural strategy is to delay, promise and ignore until the opponent gives up. China has been doing this for thousands of years and Russia doing the same for centuries. Neither of them ever loses.
Both of them are giving the Orange Menace plenty of room to negotiate against himself.
And his increments will signal I have no strategy!
Trump/Bessent need to get to down to 50% ish tariffs on China. Their need will only grow.
However, they can’t do so unilaterally without appearing to get something in return. Basically, they need Xi’s assent to retreat from Trump’s impulsive 125%.
What will be Xi’s ask to let the US out of this self-set trap?
He should be thinking big here.
– Fewer restrictions on technology imports from US and West (AI, semicap, etc)? NVDA would pay Trump handsomely for that.
– Less US support for key domestic industries (rare earths, renewables, etc)? Trump campaigned on repealing the IRA and un-greening America,
– Less US support for Taiwan’s defense? Everything’s for sale, isn’t it?
Or bigger.
Anyway, Xi shouldn’t cooperatively dial China’s retaliatory tariffs back to match the US retreat. That would be letting Trump control. Xi should take control.
This will take time. As H says, Xi has all the time to “make a deal”. Trump has months, probably not a year.
Let’s see – all of this bluster won’t result in any meaningful jobs as Americans won’t work in factories or on farms in any meaningful number. Pushing for more oil domestically is self-defeating as oil execs will readily state that they don’t see much use in drilling more as the lower prices will hurt the industry more than help.
The areas where we might see good jobs would be in infrastructure and green energy (not to mention government, healthcare, and education), but Trump is trying to tank each of those sectors. The stupidity knows no bounds, but at least Trump can fly around in his new Qatari-sponsored flying palace shilling meme coins.
I just listened to a piece about how Apple’s iphone production is so completely embedded in China that it effectively cannot be moved elsewhere – an example of what this article is saying.
I can see the argument for Xi realizing Trump needs a win and trying to extract concessions no one recently thought we’d make, especially on tech transfer.
But my default position is Xi won’t burn calories on this. What faith would Xi have in any deal anyway? If Trump’s made one thing very clear, it’s that a deals a deal, at least until he’s done with it. Rename a pedestrian foot bridge after him and move on.
Maybe caution will prevail in Beijing.
But seriously, looking at what the US is doing to destabilize and degrade its relationships, government, system – it’s like Santa Claus has come for China. A hostile, belligerent Santa, throwing cookies and spilling milk, insulting and threatening, but his bag is full of gifts and they are falling out into Xi’s arms.
Maybe Xi will carpe the diem.
H-Man, methinks Xi will call his bluff and give him a dose of “this is what it will look like on your end”. Sorta like going to your local grocery store when there is CAT 5 100 miles offshore, empty shelves everywhere.
How does the Qatar “gift” of a luxury 747 for Trump’s new Air Force One count in the trade balance? What about all the intelligence data that will flow from the plane back to Qatar? Will those be “goods” or “services”?
A shooting war would be worse. If trump gets something he can call a great victory, so be it.