The Wall Street Journal reports that stocks are up this morning, in response to what the day traders heard as irenic comments from China’s Ministry of Commerce.
The aforesaid purportedly irenic comments are set forth in this CNBC article, which relies on a translation from the original Mandarin. Here is how I believe matters now stand.
A trade war involves a series of steps in which each side stabs itself in some vital organ, in order to bring about collateral pain on the part of the other side.
Around the close of business last Friday, Trump and the geniuses who advise him were stampeded into a massive new step, involving tariffs on $550 billion in Chinese imports—that is to say, a humongous escalation of taxes on American importers of Chinese goods.
Significantly, China did not “retaliate” in response to Trump’s latest “retaliation.”
In other words, with Trump having shot himself in one foot, the Chinese elected not to respond by shooting themselves in both feet.
And, as of last evening, the Chinese editorialized about their decision not to retaliate; thus spake the Ministry of Commerce, through its official spokesperson, Mr. Gao Feng: “China has plenty of means for counter measures, but under current situation, the question that should be discussed right now is about removing the U.S.′ new tariffs on $550 billion Chinese goods to prevent escalation of the trade war.”
And, by the way, Mr. Gao added, please let me reconfirm that Donald Trump is a lying liar when he claims we are begging to reopen negotiations on his terms. Ain’t so. We are willing to negotiate all right, but only on our terms.
And So, to Sum Up
And so, to sum up, Xi has Trump over a barrel. Like a diner at a Chinese restaurant, Trump can pick from Column A or Column B. But the menu offers only two choices.
Column A: Trump looks like an idiot by backing down from his new tariffs of last Friday evening. In which case, China will be willing to talk about a China-friendly trade deal. Which will make him look like an idiot once again.
Column B: all the tariffs stay in place for now, and the American economy suffers bigly.
Bon appétit, Donald.