You say the tariffs on China were initiated to protect the US as the number one economy ( what you call super power) in the world. I agree that was Trump's intention. The big question is if he will succeed in getting China to make structural reforms or will it backfire? By backfire I mean the tariff war ends up slowing the US economy to a crawl and/or recession results. The verdict is still out. But Trump will likely pay the price if the US economy enters recession as the bond market thinks.
As for the inverted yield curve, it has forecasted the last 7 recessions. Will this time be different? Perhaps, but I doubt it. I understand overseas investors and traders have been buying US debt because yields in the US are much higher than most countries overseas.
It is not just liberals who are talking recession, but many conservatives and CFOs who are in large part conservatives.
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Trump keeps on talking about how China wants a deal. Yet it has been 21 months since the first tariffs went into effect and there has been no deal. One can say that tensions have gotten worse between the two countries since the tariffs began. Trump expected a trade deal with China by now. He thought his tariffs would break China and they would be running to the bargaining table. So, yes, he did underestimate the resolve of the Chinese people and strength of the Chinese economy.
Clinton, Bush and Obama were more free trade oriented than Trump is. Trump is a populist and extreme nationalist. Clinton was happy to have China come into the WTO and the Fortune 500 was excited to establish a presence in China. Obama was bothered by China's intellectual property theft, but did nothing about it. That was left to Trump, who chose to go it alone without the support of our allies in Europe and Asia. If Trump started the trade war with China with trade deals with the EU and our Asian allies, he would have had more clout in negotiations.
It all boils down to whether Trump can make a substantial, comprehensive trade deal with China before the US enters recession over the next year before the election. If he cannot do so, the election will be very close with him probably losing if Warren and/or Biden play their cards right.
PS Your response was good, a bit biased in favor of Trump's position, but I expected that.
Historically speaking, Tariffs have proven to be a high stakes strategy which neither country wins. |
