Someone had to blink first on the China trade war issue, and it wasn’t China.
Despite all the harsh rhetoric and promises to protect America’s valuable intellectual property, President Trump just recently backed away from imposing tariffs on China. The economic implications were quite severe as investors worried about how the tariffs would ripple down.
Of course, when Wall Street realized that the much-feared China trade war wasn’t going to happen, at least not imminently, the Dow Jones responded eagerly. The venerable index gapped-up 1.21%, providing a much-needed technical boost.
Prior to the run-up to the China trade war negotiations, the Dow traded in between its 50 day moving average at the top, and its 200 DMA as bottom support. And with today’s swing higher, the benchmark index is positive for the year, albeit slightly at 0.82%.
Pure economists and investors will love the results from the negotiations. A true China trade war would have crippled many industries, particularly the agricultural sector. Should China wish to play hardball with President Trump, all it has to do is to deny U.S. soybean exports. That alone would send a serious message.
But despite the big win, it came at the cost of national pride, and some would say dignity. Republican Senator Marco Rubio wasn’t impressed, tweeting:
China is winning the negotiations. Their concessions are things they planned to do anyways. In exchange they get no tariffs, can keep stealing intellectual property & can keep blocking our companies while they invest in the U.S. without limits.
Many political pundits and experts were confused at the administration’s sudden reversal. While abrupt, it shouldn’t be that outrageously surprising. President Trump wants to secure a peace deal with North Korea, and that would involve China’s blessing if he wants to go the non-military route.
But why would he want peace with North Korea? Some might argue that Trump is doing it for national security. I, however, have a much more cynical opinion.
Trump wants a legacy, plain and simple.
He’s not the simpleton that the mainstream media makes him out to be. President Trump knows damn well that he’s not popular, nor will he ever be. But by securing some kind of substantive deal with North Korea, he will have accomplished something that no other President has been able to.
In one Hail Mary pass, with one swing at the bottom of the ninth inning, Trump can change the entire calculus of his administration. That’s why he’s conceding on the China trade war issue.
Yes, it stinks to high heaven. But who said politics was for the people?