This morning the markets reflect the tariff war with which President Trump is afflicting the world, but there’s an outcome that I worry about. Here’s CNN/Business:
Trump also threatened to slap an extra 50% tariff on China if the country doesn’t back down from its retaliatory tariffs it announced Friday. China’s Commerce Ministry on Tuesday said the country would “fight to the end” of the trade war and would continue to stand up to Trump.
The escalating trade war between the two largest economies is turning into a high-stakes game of chicken. China may be staring down a midnight deadline to avoid tariffs surging over 100%, but it so far it is standing up to Trump, with no signs of blinking.
China has squashed deals that Trump wants – including a US company taking control of ports on both sides of the Panama Canal and a deal to sell TikTok to a US-based company. Both countries’ economies would be hurt in a trade war – and given the massive trade imbalance with the United States, China could very well be hurt worse.
Here’s the thing about autocracies like China – leaders, especially those who attain lifetime positions, like Xi Jinping, tend to leave only when dead – and rarely voluntarily. They become victims of their failures or their rivals.
And, knowing that, thrusting China and, therefore, Xi into a crisis like this may have existential overtones for Xi. This could lead to violence.
For all the bluster from both sides, neither wants to take this to the next level. Neither leader can afford to have the citizenry become restive, Trump moreso than Xi. After all, Xi can spin a brutal response as Being necessarily tough, but here in the States, while such a claim would gain some supporters, the substantial opinion to a brutal response will be to place Trump in an inferior position to most other leaders, domestic and foreign.
If you have to oppress your citizens, you’re not a strong leader. You’re weak and a bit of an idiot – and in danger of being run out of town.
So watching this play out should prove very interesting.
