Trade

China Has Doubts After Schrodinger’s Trade Deal

Written by SK Ashby

China's foreign ministry (their version of the State Department) recently announced that they had reached a deal with the Trump regime to roll back at least some tariffs that are already on the books, but Trump and his top trade adviser Peter Navarro said that wasn't true. Trump 'didn't agree to anything,' they said.

So, what happened? Was there really a deal that crumbled in less than 24 hours?

It's still not entirely clear, but CNBC reports that the Chinese government genuinely believed they had reached a deal but now they're pessimistic about "phase one" of Trumps "greatest and biggest deal ever" because, like us, they don't have the foggiest clue what Trump is up to.

CNBC also reports that some members of China's ruling party believe they should just wait it out and negotiate with a different American administration.

The Chinese are looking carefully at the political situation in the U.S. including the impeachment hearings and the presidential election, the source said, adding the officials are wondering if it is more rational to wait things out since it is unclear what Trump’s standing will be even in a few months.

There is disagreement over issues such as a specific number of agricultural purchases, the source said. The Chinese are resisting because, in part, they could risk alienating other trading partners, the source told CNBC.

I was going to say negotiating with Trump is like negotiating with a toddler so it's understandable if the Chinese want to wait it out, but that's not fair to toddlers. My youngest niece is capable of recognizing when she's winning and just go with it. Trump, on the other hand, always wants more.

It feels nigh impossible to predict what's going to happen next, but I can see a scenario in which China will not agree to make the large purchases of American farm goods that Trump promised and that will prevent "phase one" from becoming a reality.

The biggest question in my mind is whether Trump will escalate and impose more or higher tariffs and the thing is he could do that even if they sign some kind of truce. He's done it before.