U.S. President Donald Trump while in Europe for a NATO summit spooked financial markets by saying he ‘would like to wait until after the 2020 American general election’ to conclude a trade deal with the communist, totalitarian nation of China.
Equity markets reacted negatively on the news and bonds rose in a Pavlovian flight to safety response.
“I have no deadline, no. In some ways, I think I think it’s better to wait until after the election with China…In some ways, I like the idea of waiting until after the election for the China deal. But they want to make a deal now, and we’ll see whether or not the deal’s going to be right; it’s got to be right,” Trump declared in London this morning.
Chinese state-run media voiced the Chicom’s rage at yet again being out-played by POTUS.
Contrary to the Twitter bravado, as CD Media wrote recently, higher tariffs on Dec 15th and having them in place for another year will be a death blow to the Chinese house of cards economy and probably the nail in the coffin for Xi Jinping’s ‘lifetime’ reign.
Look for Xi to come running back with his tail between his legs for the simple fact is Trump no longer needs a China trade deal – the Chimerica relationship is decoupling.
What China wants and what they are not going to get is a removal of tariffs. They aren’t going to achieve that goal without reform of their legal and trade system, which they cannot do.
This is a battle between good and evil, and good is winning.