Trade war, day 146: Talking over Trump on trade

Foreign Affairs

Following the publication of Trump’s tough-talking Wall Street Journal interview — variously described as “a mess” (paywall), showing “Trump has no idea what he’s doing” — we have a contradictory, and far more conciliatory, outlook for chances of a trade deal coming out of Trump’s planned meeting with Xí Jìnpíng 习近平 in Buenos Aires this weekend. The New York Times (porous paywall) reports:

  • Larry Kudlow, the president’s chief economic adviser, expressed a more positive outlook, saying, “There’s a good possibility that we can make a deal, and he is open to it.”
  • Despite Trump’s clear statement to the WSJ that postponing a planned January 1 tariff hike is “highly unlikely,” other officials told the NYT that “if the two leaders agree to talks…Trump would most likely postpone the increase to 25 percent and hold off on any new tariffs.”
  • “The divisions inside the West Wing over trade remain fierce, as they have since the beginning of Mr. Trump’s presidency, and the contest for Mr. Trump’s ear will most likely continue until the moment he sits down with Mr. Xi in Argentina.”
  • Back at the table for the Xi-Trump dinner will be the previously uninvited trade adviser Peter “Death to China” Navarro: “The United States trade representative, Robert Lighthizer, has since authorized Mr. Navarro’s travel, raising the prospect that he will be on hand to encourage Mr. Trump to play hardball.”
  • Will economic reason prevail? “The gyrations in the stock market, the rise in interest rates and thousands of layoffs announced by General Motors this week have all rattled Mr. Trump, officials said, fueling his desire to emerge from his meal with Mr. Xi with something he can claim as a victory.”

Meanwhile, in Europe, Xi Jinping and Vice Premier Liú Hè 刘鹤 continue efforts to rally support for trade with China.

  • In Spain, Xi praised China’s relations with the nation as the “best in history” and encouraged engagement on trade, tourism, and China’s Belt and Road Initiative.
  • Liu met with German Chancellor Angela Merkel and passed on a message from Xi that China “is willing to cooperate closely with Germany to enrich the strategic connotations of bilateral cooperation and strive to promote global economic governance, safeguard multilateralism and free trade, and build an open global economy.”
  • Also in Germany, Liu spoke at an economic forum in Hamburg, where he emphasized that there would be no winners in a trade war: “We believe that protectionist and unilateral approaches do not offer solutions to problems on trade. On the contrary, they will only bring about more economic uncertainty to the world.

Other trade-war-related news:

  • Treasuries will, unsurprisingly, not be a weapon in the trade war
    China not seriously considering U.S. Treasuries as trade war weapon – envoy / Reuters
    “‘We don’t want to cause any financial instability in global markets. This is very dangerous, this is like playing with fire,’ Ambassador Cui Tiankai told Reuters in an interview when asked if China would consider selling Treasuries or reducing purchases should trade tensions worsen.”
  • Game off?
    Trade war raises questions for US sports in China / AFP
    “US basketball, golf, American football and others have invested significant time and money in their presence in the Chinese market but they face potential disruption if relations sour further.”
  • Russian optimism
    Putin: US-China trade war offers great opportunities for Russia / RT
    “According to WTO estimates, the mutual restrictions recently imposed by G20 countries reduced global trade by almost $500 billion. Is anyone interested in this, including such a large economy as the US? For us this creates certain opportunities,” Putin said.
  • More winners and losers
    The American casualties of Trump’s trade war / NYT (porous paywall)
    “In Trump’s new tariff regime, Cobb and other business owners see a hurried and blunt approach that has been carried out, they believe, with little public debate about how it could affect the American economy and equally little sense of the long-term strategy.”
    Who is Trump’s trade war really helping? / The Week
    “By and large, the benefits to Americans of these policies will flow overwhelmingly to the rich shareholder class in the form of more corporate profits, legal fees, and returns.”
    Chinese metals win U.S. tariff waivers with little resistance / NYT (porous paywall)
    “Since March, when the tariffs of 25 percent on steel and 10 percent on aluminum went into effect, the Commerce Department has approved a higher share of exclusion requests that include imports from China than it has from American allies like Japan and Canada.”
    BMW executive says China tariffs haven’t hurt US-made SUV sales one bit / CNBC
    “China’s import taxes on U.S.-made cars have not hurt demand for BMW’s X line of sport utility vehicles that are made in South Carolina, a top executive said Wednesday. ‘We have not seen one single unit drop since the tariffs have been introduced,’ said BMW North America President and CEO Bernhard Kuhnt. BMW’s Spartanburg plant is its largest in the world, and it primarily makes SUVs, which are becoming ever more popular with customers in many markets around the world.”
    Commodity woes run deeper than China / WSJ (paywall)
    “The broad commodity selloff this year should certainly worry investors, but not because of China per se. China’s growth will deteriorate further in early 2019. Global growth, however, is clearly slowing nearly everywhere outside the U.S. — that is what really ails commodities.”
    Penny for your corn? Stingy trade-war aid irks U.S. farmers / Reuters
    “Federal economists have calculated that the nation’s losses in corn — its largest crop by harvest and export volume — amount to just a penny per bushel, a pittance farmers call absurd. That’s in stark contrast to the substantial $1.65 per bushel the government will pay for lost sales of soybeans, the crop hardest hit by retaliatory Chinese tariffs.”

Previously in SupChina’s trade war coverage:

Trade war, day 145: Trump talks up his tariffs