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Trade-War Toddler Triggers Market Meltdown

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Dow Drops 700 as China Retaliation Begins

Similar to the business acumen and negotiating prowess he exhibited while losing more than any other U.S. citizen during his “glory days” as a real-estate mogul, Trump is going for broke in the China trade war. Trump lost over a billion dollars between 1985 and 1994, even while writing a book on how to be a genius negotiator.

The latest phase in the Trump trade war started with a typical tweet-storm last Sunday. On the following Tuesday (May 7th) China responded, in Dirty Harry fashion, saying “Don’t even think about it” and “We will not back down”.

China slaps back with $60 Billion in Tariffs on U.S. products to begin on June 1

The list of products is set to contain 5-25% tariffs on approximately five thousand items that will likely include textiles, chemicals, agricultural products and metals. In a hint that this is only the beginning China added that they “will never surrender”, apparently, just for good measure.

In characteristic fashion, Trump tweeted various random comments interlaced with threats and simplistic advice on how U.S. consumers can avoid being affected by the tariffs, claiming that his war is “very good for USA!”.

All from a President that “Doesn’t Know What a Tariff Is

As reported in Esquire there’s a distinct possibility that Trump is out to lunch on trade theory (see billion dollars lost in his personal business deals above for a hint).

We will be taking in Tens of Billions of Dollars in Tariffs from China. Buyers of product can make it themselves in the USA (ideal), or buy it from non-Tariffed countries.

Trump in recent tweet

While this may sound peachy, his own advisor was forced to clarify:

“Yes, I don’t disagree with that,” said Larry Kudlow, the head of the president’s National Economic Council, when Chris Wallace, host of “Fox News Sunday,” asked him, “It’s U.S. businesses and U.S. consumers who pay, correct?” Kudlow added, “Both sides will pay”

Lawrence Kudlow, head of the president’s National Economic Council, from a Fox News interview

Possible brinksmanship on display as Trump and Xi Jinping plan potential meet at Japan Summit

In a possible set up for both to appear to “rescue” their respective countries from this toddler-made crisis, a potential meeting at the G20 Japan summit, set to begin on June 28th, has been mentioned by the Trump administration.

A deal could be announced during the summit, or even before. However, it is unlikely that this will be much more than jawboning, at least initially, and meant to save face and calm markets while the war, and the Tariffs continue. In the meantime, watch for a possible European entrance into the fray to be next.


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