If Trump signs off on a minor trade deal that does not fundamentally alter or reform the structure of our economy or our trade relationship with China, will it still be enough to please the market?
Absolutely according to chief strategists who spoke to CNBC.
One reason why the market surges higher each time the White House engages in happy talk is because even a "wimpy deal" is good enough even if a "sweeping deal" appears to be out of question.
“This is the president helping the Santa Claus rally even more,” said Prudential Financial chief market strategist Quincy Krosby. “This is as much of a signal as we’ve wanted.” [...]
“The devil is in the details. If you just look at his sound bites on Oct. 11, they’re identical to what he just said. The chances of more tariffs on the 15th are slim,” said Greg Valliere, chief U.S. policy strategist at AGF Investments. “I think they’ll find some way to finesse that. In terms of some big sweeping deal, it’s either a wimpy deal or no deal.”
A sweeping deal isn't necessary because none of this was necessary; Trump's trade war was never necessary.
Anything that moves us closer to where we were in early 2017 before Trump first imposed tariffs on foreign solar panels is enough to please the market because the trade war has only held the greater economy back, not propelled it forward.
In our consumer-driven economy, Trump's unilateral tax on consumers (tariffs) has weakened demand and plunged the manufacturing sector in recession. It has soured international relations and made the United States look like an unreliable partner for virtually anything.
Trump is one of the world's worst negotiators, of course, but our experience should put the lie to both conservative and liberal labor critics of trade deals who've supported the trade war. We are no closer to whatever they wanted today than we were years ago and we've paid a high price with nothing to show for it.
If you're someone who believes we should take a hard stance against the labor practices and living standards of other countries we trade with, Trump's trade war has ultimately made that even less likely and weakened the position of future administrations who may consider relitigating the whole thing.
If I'm advising the next administration, I'm advising them to quietly work our way back into the Trans-Pacific Partnership. Quietly -- because it still gives critics on both the left and right the vapors even though it should be obvious by now that we never should have exited the deal.