More on Trump and trade

This Politico story caught my eye:

President Donald Trump’s top advisers are rushing to find an escape hatch for a series of tariff increases in the coming months, worried about the potential for further economic damage.

Many of the president’s top economic officials are trying to resurrect the terms they previously were negotiating with China, a deal officials said was “90 percent” done before a sudden impasse this summer, according to a person familiar with the discussions.

This reminded me of a post I did six weeks ago:

Stocks fell nearly 2% after the tariff announcement, and that’s the reaction that rational readers should go with. But if anyone is foolish enough to trust my judgment, here’s a more optimistic take.

I suspect that Trump has decided that he wants to do a China deal before getting into the election year. He knows that his negotiating position will be weaker in 2020, as the Chinese would have an incentive to string things out until after the election.  They know that Trump doesn’t want to risk an economic shock right before the election. In addition, Trump wants to run for re-election with a big “win” against China under his belt. . . .

Trump presumably knows that China will agree to a deal based on their best previous offer, which was reported to be more than 90% of a completed deal. Thus Trump knows he can get a deal anytime he wants, if he’s willing to settle for a deal that incorporates China’s best offer in previous negotiations. 

And from the same 6-week old post, how does this look today?

To his credit, Trump correctly understands that the John Bolton’s of the world are foolish warmongers, and Huawei is not a threat to US national security. I suspect that Marco Rubio will be more disappointed by the deal than I will be.

I’m less confident in other aspects of the previous post, such as the claim that an agreement is near, or that the Chinese would still accept the “90 percent” offer (which some sources suggest was rejected by Xi Jinping himself.) But this seems to be what Trump now wants. Any deal would have to wait until after October 1, a very important day in China.

BTW, US stocks recovered once it became clear that Trump was again interested in a trade deal.

You’re welcome.

PS. A few weeks ago we learned that Trump lied in his claim that the Chinese called him to restart trade talks:

Trump flashed signs of optimism this week that the trade war could be resolved, saying he’s received calls from Chinese officials saying they wanted to restart talks. Though Trump and Treasury Secretary Steven Mnuchin insisted there had been “communication,” aides privately conceded the phone calls Trump described didn’t happen they way he said they did.

So now when there’s a disagreement about facts we should trust the Communist Chinese more than our own government? What does that say about the charges that Huawei was engaged in spying?

More recently, Kevin McCarthy sounded like a 1970s-era Soviet spokesman:

Minority Leader Kevin McCarthy said Thursday that the national debt would be his top priority if Republicans succeed in retaking the House in 2020.

“First thing we would do is make sure our debt is taken care of,” McCarthy told reporters at a GOP retreat in Baltimore. “This is continuing to grow. … Every great society has collapsed when they’ve overextended themselves,” the California Republican warned.

Yes, and the two boys who shot up Columbine put out a statement that more needs to be done to improve our educational system.



15 Responses to “More on Trump and trade”

  1. Gravatar of Ewan Ewan
    15. September 2019 at 05:04

    Dear Prof. Sumner
    Could you point me to a primer or manifesto on neoliberalism. I’m working through the blog posts, but would appreciate a summary of the main tenets. If you’re too busy, just ignore me. Thank you.

    Also, your posts on China are very welcome to someone as profoundly ignorant as I am. More, please, whenever you can.

  2. Gravatar of rayward rayward
    15. September 2019 at 06:12

    There’s a reason why the religious right has flocked to the Republican Party: it’s what they have in common, hypocrisy.

  3. Gravatar of SV SV
    15. September 2019 at 06:32

    Most Democrats and the Five Eyes nations agree with Trump’s position on Huawei so it isn’t just a Trump being deceitful thing

  4. Gravatar of ssumner ssumner
    15. September 2019 at 16:09

    Ewan, There are different definitions of neoliberalism, most written by its critics. I seem to recall a very good Sam Bowman video on why he’s a neoliberal, I’d check that out first to get an overview.

    SV, Has the UK banned Huawei?

    If “most Democrats” believe something, is it true? I’m not saying that Huawei has done zero spying (US intelligence services get our tech firms to help them out), but I see no evidence that it’s a major security threat.

  5. Gravatar of Ewan Ewan
    16. September 2019 at 00:56

    Prof. Sumner
    I was thinking more of your own use of the term (precisely because of its critics’ scatter gun approach). I’ll try the Sam Bowman. Thanks.

  6. Gravatar of David Tomlin David Tomlin
    16. September 2019 at 01:55

    Have you not read about the Bay of Pigs? Several days in which US officials published several lies, while their Cuban counterparts were telling the truth on the same subjects. This isn’t disputed. The U.S admitted to the lies soon after.

  7. Gravatar of Justin Justin
    16. September 2019 at 07:51

    I’m starting to doubt that the goal is to get a “deal”. The logic of Great Power Politics, if you think the Realists have a useful model (I read John Mearsheimer so now I’m a “realist”), is that China and the USA will be rivals and in a sort of cold war. Ideology doesn’t matter necessarily. Everyone had the same ideology, more or less, in the 17th century, and you still had competition between the top states.

    I think the “goal”, might instead be to reduce the level of integration between the USA and China. Maybe China will buy US soybeans or whatever, and America will buy certain lower-value manufactures, but I kind of doubt at this point that Chinese telecom hardware will be allowed into the US. It’s just too strategically important, and of course there will be backdoors into those systems, just as the US has Intel and AMD put backdoors into their processors. The logic of free trade isn’t the only layer in the model. Free trade with the USSR would have been economically optimal too, but the political incentives wouldn’t allow for it.

  8. Gravatar of Christian List Christian List
    16. September 2019 at 08:31

    That’s pretty much what Scott said last time: “Sure they spy, but that’s not a security threat!”

    If that’s not a security threat, then nothing is a security threat.

    Scott got so lost in the labyrinth of his CCP trivialization and CCP propaganda that he can no longer find the way out.

  9. Gravatar of ssumner ssumner
    16. September 2019 at 15:30

    David, Don’t forget the Gulf of Tonkin. And many other examples. But the lies are increasingly common and almost casual.

  10. Gravatar of Christian List Christian List
    17. September 2019 at 14:13

    In authoritarian regimes like China, lies are so all-encompassing that they are no longer reported.

  11. Gravatar of xi xi
    17. September 2019 at 18:53

    The goal is to destroy the rise of China, and we’ll have to see how that end game plays out. But you can be sure no deal is coming. At least not anything meaningful. China already leads the world in AI development, and most manufacturing facilities in Schenzen have moved to AI to reduce future losses to lower labor countries which would historically be the end result as wages rise. That is an interesting development on many fronts.

    If you want to win, you have to be willing to take a few hits and those who own businesses and do not talk about business from behind a small, and I do mean “very small” windowless office desk, typically are bright enough to understand this. So don’t expect the farmers in america’s heartland to be so short sighted. They are much brighter than you. being politically astute, trump knows this!

    If you send jobs abroad for 20 years, you cannot fix the problem overnight. this will be the first generation since world war 2 that has to fix the mess of previous ones. But we’ll do it. We’ll fix this knuckle-dragging, foot-dragging, ideology that you and the other academic cavemen have thrust upon us for the past half century.

  12. Gravatar of ssumner ssumner
    18. September 2019 at 09:59

    Xi, The rise of China won’t be stopped by outsiders.

    You said:

    “We’ll fix this knuckle-dragging, foot-dragging, ideology that you and the other academic cavemen have thrust upon us for the past half century.”

    You seem confused. I’m not the one advocating the trade war against China, Trump is.

  13. Gravatar of Al Al
    19. September 2019 at 16:29

    In the case of Huawei, my view is that it is driven more by fear of what it COULD do (capability), given the close ties between it’s corporate leadership and the CCP (intentions). You get the sense sometimes that the US intelligence community basically considers Huawei a state owned enterprise. I don’t think there is actually any hard evidence that Huawei has tried to exploit its devices to engage in any activities that a reasonable person would consider espionage. But in a world where any half decent hacker can turn your grandmother’s networked PC into crypto mining machine in his botnet, is it any wonder that a bunch of people whose job is to be paranoid on our behalf would feel differently?

  14. Gravatar of ssumner ssumner
    19. September 2019 at 20:15

    It wouldn’t surprise me if Huawei were involved in espionage, or if US tech firms were involved in espionage. I have no idea if they are, but it wouldn’t surprise me. I don’t happen to believe that spying is very important during peacetime, at least most of the time. (Perhaps the Soviet Union stealing nuclear weapon secrets might be an exception.)

  15. Gravatar of Pietro Pietro
    24. September 2019 at 05:43

    Never reason from a change in Trump’s behavior? 🙂

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