As the first salvos of the trade war start to burst in mid-air, it’s not clear whether President Trump has the stomach for the fight.
Gone was all the bravado about how economic fist-fights are “good, and easy to win” when the market was bowled over by Chinese retaliatory tariffs Wednesday morning. The Dow Jones industrial average was plunging a significant bit, but an incredulous president was still insisting that “we are not in a trade war with China.”
We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!
— Donald J. Trump (@realDonaldTrump) April 4, 2018
But if knowing is half the battle, it looks like the U.S. is about to lose, because we are definitely gearing up for what looks like a nasty economic conflict.
The Trump administration targeted $50 billion worth of Chinese imports with a planned 25 percent tariff on Tuesday. The Chinese responded the same day with a tariffs on $50 billion worth of U.S. goods. On Wednesday, the president says not to be alarmed.
Sure, the tariffs are just talk right now. But the two economic heavyweights aren’t just in a light shoving match. Idle talk or not, tariff threats have an effect on the market. They also decently forecast things to come. If Trump can’t come to terms with a 350 point drop in the Dow right now, if he can’t be clear eyed about risks and realities, then what will happen when things get really ugly?
So far, making America great again has meant reinvigorating the economy. The Trump administration has made that happen with deregulation, tax cuts, and generally a pro-business outlook. A booming economy has boosted both paychecks and the president’s own popularity. All of that could become collateral damage during a trade war.
If push comes to shove, is Trump willing to stomach those losses? Right now he doesn’t even seem willing to acknowledge the conflict in the first place.
