Punishing America First - WSJ editorial
Donald Trump and his advisers spent much of Friday telling everyone that the U.S. is not in a trade war with China, but investors werent buying it. Equity markets took a major header, falling by more than 2% across the board. Maybe investors are starting to look at the damage Mr. Trump may do to the Farm Belt states and to the GOPs chances of holding Congress.
Mr. Trump raised the stakes late Thursday in his tariff showdown with Beijing, vowing to impose another $100 billion in tariffs on Chinese goods in light of its unfair retaliation after his initial $50 billion in tariffs. The latest target list still hasnt been drawn up, and the silver-lining crowd is hoping that Mr. Trump was merely popping off as part of his negotiating strategy. Maybe thats right. But then China popped off in return, saying it is ready to forcefully strike back if the new tariffs are imposed.
Thats the problem with protectionism. The other side can strike back, and businesses and markets dont know when the politicians will decide to stop pounding their chests.
(snip)
Mr. Trump doesnt even seem to mind if the tariffs do some economic damage while hes supposedly fixing the U.S. trade deficit. Im not saying there wont be a little pain, but the market has gone up 40%, 42%, so we might lose a little bit of it. But were going to have a much stronger country when were finished, the President told a New York radio show on Friday. Nice to know it will all turn out for the best.
Meanwhile, much of that pain will fall on American agriculture, not least the Farm Belt states that Mr. Trump carried in 2016. Apparently he thinks he has them in the bag for 2020 as well, though he might want to reconsider if the tariff wars continue.
(snip)
Farm-state Republicans are beginning to notice. China is guilty of many things, but the President has no actual plan to win right now. Hes threatening to light American agriculture on fire, said Nebraska Senator Ben Sasse on Thursday. Lets absolutely take on Chinese bad behavior, but with a plan that punishes them instead of us. This is the dumbest possible way to do this.
Someone in the White House seems to know the risks because its press shop spent Friday sending out missives telling farmers not to worry. Mr. Trumps $100 billion tariff threat on Thursday included that he had told the secretary of agriculture to use his broad authority to implement a plan to protect our farmers and agriculture interests.
Whats Secretary Sonny Perdue going to dobuy up all the soybeans China no longer buys? Order farmers to slaughter their pigs to produce less pork that will also be subject to Chinese tariffs?
The basic economic problem with trade protectionism is that it is a political intervention that distorts markets. One political intervention leads to another, and the cumulative consequence is higher prices, less investment and slower economic growth.
(snip)
Chinas trade abuses need to be addressed, but Mr. Trumps tariffs first strategy risks punishing America first. Heand wehad better hope Mr. Xi is willing to bargain.
https://www.wsj.com/articles/punishing-america-first-1523054084
GeoWilliam750
(2,522 posts)Not sure where he gets the 40-42%.
Also, from the time that it actually became a race in August 2016, the 30 year treasuries have dropped nearly 20% of their value. 30 year fixed mortgage rates have risen by nearly a percentage point since August 2016, and are just below the highest rates since 2011.
unc70
(6,119 posts)GeoWilliam750
(2,522 posts)Trade weighted (ca 7%) it would be a little less than than the gains on the index, but nonetheless, it erases the majority of those gains.
Looking at the major global markets in USD terms, the US is significantly the worst performer since the inauguration. In minor markets, perhaps only Tel Aviv and Toronto are weaker in USD terms.
Interesting.
Skittles
(153,193 posts)especially Obama
freethought
(2,457 posts)It is not about them and their livlihoods. It's about him and his grotesque ego. He could give two s@%s about them.
Just wait until he blunders us into a REAL war.
Tough luck. They own him now.
Soxfan58
(3,479 posts)Is he tanking the economy intentionaly? Who benifets from a China US trade war? Russia.
malthaussen
(17,216 posts)You go to war with the stock market you have, not the one you'd like.
-- Mal