Tariffs

Alarmist news reports and panicky stock sell-offs. A threat to impose tariffs on US goods in retaliation for President Trump’s threatened levies. You’d think that Beijing had just ruthlessly shut down a major engine of American growth. But the truth is that tariff fear-mongering reveals the gulf between America’s financial markets and its real economy that provides everyday goods and services. The Chinese economy has grown spectacularly since Beijing turned away from Maoism in the 1980s. It’s true that major American industries from aircraft to agriculture have profited handsomely from supplying Chinese demand. The offshoring model supercharged by China’s admission to the World Trade Organization (WTO) in 2002 has been especially lucrative.

At the last minute the Chinese Communist Party chief Xi Jinping vetoed the trade deal with the United States, after his representatives had negotiated and agreed to it. Xi claimed that he will take the responsibility for ‘all possible consequences.’ This left President Trump no choice but to impose higher tariffs on some Chinese imports. This battle over trade marks only the early rounds of the US struggle with China. China’s economic success was achieved in large measure by taking advantage of the working people of both China and the US. It was made possible because the US allowed it to enter the world’s free trade system. Because China entered the West’s economic ecosystem a generation ago, it has flourished.

Ongoing trade talks between American and Chinese officials took an unexpected turn on Sunday: President Trump took to Twitter and announced a plan to impose tariffs on all Chinese imports by Friday. The tariff threat adds urgency to negotiations that will continue on Wednesday, when a Chinese delegation is due to arrive in Washington, DC. The move is a departure from last week when US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer arrived in Beijing to initiate a fresh round of trade talks with China. Despite chronic trade tensions, both sides had sounded optimistic ahead of the meeting. State Councilor Wang Yi, China’s top diplomat, expressed hopes the two sides could ‘reach a mutually beneficial, win-win agreement’.

Will he stay or will he go? Speculation about President Trump’s future began with House Speaker Nancy Pelosi’s comment this past weekend that she worried in the run-up to the 2018 midterm elections that Trump wouldn’t accept a close result and deem it a Democratic hoax. Now she’s indicating that she’s not convinced that he will abide by the results of the 2020 election if they are close and he’s the loser. As it happens, Trump amplified those concerns with a tweet riffing on Jerry Falwell, Jr.’s contention that he deserves an extra two years added to his first term because an attempted deep state putsch, led by Robert Mueller and his minions in the FBI, deprived him of the ability to govern effectively over the past two.

Beware the Ides of March. President Trump has indicated that he will defer his promised hike in tariffs on Chinese products to 25 percent until March 1. Stocks promptly went up. ‘If all goes well,’ Trump said on Sunday, ‘we’re going to have some very big news over the next week or two.’ What’s the big deal? Trump, who fashions himself a wheeler-dealer par excellence, is claiming that he, and he alone, can reach the great compact with Beijing that will put an end to its predatory trading practices. China, which continues to smart over the humiliations inflicted upon it by the western powers, including America, during the nineteenth century, has essentially flipped the script, at least if you listen to the hawks around Trump and in the media.