On his mind, President Trump is the maker of quadruple deal always outperforms his enmity. However, in his commercial war in the real world, Trump showed his card for his most effective opponent and revealed some of his restrictions.
Several weeks of the activity of the mania tariff by Trump and the comprehensive confusion in the financial markets have finally provided some clarity: although Trump wants to reshape the entire trade system in America, His real goal is China.
During April 9, Trump imposed a new tariff on imports from almost every country, as well as additional import taxes on certain products categories including cars, steel and aluminum. Nobody gets a rest.
With the move of financial markets, Trump recently retreated on April 9 by hanging most of his “mutual” definitions for at least 90 days, until early July. The only prominent exception is China, which got the opposite treatment: even the upper tariff.
Trump’s tariff for Chinese imports is now 145 %, an increase of about 6 %, on average, when Trump took office and trained his attention on economy 2 in the world. The customs tariff rate is so high that it is an “effective siege on Chinese imports,” according to Heidi Carpeau Ridker, former chief economist in the Ministry of Foreign Affairs and an older colleague in the Council of Foreign Relations.
This leaves China in a unique opponent’s position with Trump. China has a lot of Trump’s tariff has been much more than most other American trading partners, including many who have never criticized and instead offered concessions.
China’s tariff for American goods Now 125 %, raised from 84 % On Friday, Beijing took other measures to punish American companies. China’s speech was more strict than anyone else, as the Ministry of Commerce says in a statement that China “will fight to the end.”
China will avoid a commercial war if it can, but it is a proud country led by the stubborn Autocrate, President Xi Jinping, who undoubtedly Backlin Trump’s commercial. She and his cadre are also considered China as a legitimate superpower that tries to give up equality with the United States, and perhaps after that. I have preached the radical The national doctrine for self -reliance In recent years, a commercial war with Trump may be seen as a crucible China that must pass on its way to economic greatness.
The eleventh has some advantages. For one reason, Trump’s tariff is a tax on American companies and consumers, not on Chinese exporters, which is why the first line of damage is for American stock prices. It defines the definitions of stock prices because they raise the costs of companies, which reduces the prospects for future profits. They harm Chinese exporters as well, since the definitions are effectively raised the cost of their products, letting American buyers search for other service providers or simply buy less. But the US stock market is damaged first because stock prices, in fact, are an indication of future economic developments – which are now bad markets.
Trump’s investor losses from mono -side are a combined obstacle to the extent of Trump’s survival. “President Trump loses the leverage if the shares continue to decline,” Tom Lee, co -founder of the investment company, told a press conference on April 7, amid the sale of shares. By the time Trump saved mutual definitions on April 9, the S& P 500 index fell nearly 20 % of its peak, and put it on the doorstep of the bear market. So the 20 % diving in stock values may be one of the scale for the Trump pain threshold.
trade off. From the left, President Donald Trump, former Canadian Prime Minister Justin Trudeau, Chinese President Xi Jinping, and Mexico President Claudia Shinbom (AP) ·Associated Press
The decrease in the waterfall in stock prices has started a disturbing side effect: grumbling on the bond market. Bond bond returns-interest rates-usually decrease during the stock sale process, as investors who sell stocks usually put money in liquid treasury bonds. The demand for the treasury increases the price of bonds while reducing interest rates on investors’ demand to keep them.
But from April 4 to April 9, the American TRESASURY yield increased by more than four tenths from a percentage point, when it was usually falling. At the same time, the value of the dollar has decreased by an unusual amount against the euro and other currencies, indicating that the sale of an unorganized American asset with a potentially tent consequence could be ongoing.
This added to the pressure on Trump. “The rise in the cabinet for 10 and 30 years is the final pressure point for Trump to stop these definitions for 90 days,” said Creapo Ridker.
Investors suddenly ask whether China or a group of American trading opponents may cause an American financial crisis by intentionally selling treasury bonds to raise interest rates in the United States, which may freeze credit markets. The credit crisis is generally worse than selling shares because if it can affect liquidity companies to pay their bills, especially if this happens quickly. Credit crisis and frozen liquidity Help convert a 2008 bust to a financial crash This has almost became depression.
China has about $ 760 billion in US securities, which is 2.6 % of the total US debt traded in public markets. The share has decreased in recent years, and it is not enough for China to make its weapon alone as a lever against Trump in a commercial war. China will suffer from harm from any credit crisis that strikes the United States, which may hinder the ability of many countries to buy Chinese exports at the current levels.
But just the size of the American debt burden-which will become larger only as Trump pushes the tax discounts funded in deficit-is a weakness that may not depend on Trump when he launched his commercial war. The higher its definitions, the greater the damage that will cause the American economy, and the more likely for foreign investors in withdrawing, leading to an upward pressure on prices. China believes that Trump has now shown his sensitivity to the possibility of a credit crisis.
As Autocrat, which no longer needs to deal with elections, XI can carry political pain longer than Trump. But China also has weaknesses. Trump’s tariff will harm many Chinese companies and harm the Chinese public economy if it remains in place for a long time. XI is strong but not always decisive, and there is no clear way to overcome Trump.
“He can escalate and provoke more pain, or hang out and seem weak to both foreign competitors and his home audience,” Craig Sentelton from the Defense Democrats Foundation He recently written on foreign policy. “In both cases, the gallows tighten.”
Trump says he is ready to negotiate with commercial partners, but he also showed interest in “Chapter “United States and Chinese economies25 years after deep integration. This process may have started, and as long as Trump has an opinion, it may be irreversible.
By narrowing the concentration of his commercial war on China, Trump may have improved resources that he could not bear joy elsewhere. China may not be able to win a commercial war directly, but it can definitely be a thorny enemy that causes a lot of damage – and knows where it aims.
Rick Newman is a big column writer Yahoo financing. Follow it Blouse and x: @Rickjnewman.
