Trump was so angry after China's trade retaliation that he wanted to double tariffs
- President Trump wanted to double tariff rates on Chinese goods last month after Beijing’s latest retaliation in the trade war before settling on a smaller increase, three sources tell CNBC.
- Trump was outraged after he learned Aug. 23 that China had formalized plans to slap duties on $75 billion in U.S. products in response to new tariffs from Washington on Sept. 1.
- Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer then enlisted multiple CEOs to call Trump and warn him about the impact such a move would have on the stock market and the economy.
Regardless of if China can back up this retaliation, they've ultimately edged out Trump and the USA in a critical way by calling our bluff and putting on a show of strength. Everything about Trump's reaction tells me he was not prepared for this, or perhaps he even thought it wouldn't happen. The USA is flustered and has to respond, and we also have to repurpose our economy to dig into a protracted trade war when so many of us believed that China was close to capitulating. Even if they are, the mindset has changed. Businesses have to prepare, and that can cause its own damage (see: Brexit preparations). What's more, Trump's ego is easily roused, and he'll be apt to consider drastic measures. Even if he doesn't take those measures, put your brain into the head of an investor of a company whose livelihood depends on the stability of the global markets. The US president could, at a whim, double or even triple tariffs on a massive source of trade and income to your own business, which would cripple you. You need to know what he's going to do, but he's not going to tell you until he's already done it. The Chinese don't have that problem because most of their businesses are state-run to begin with, meaning this eventuality is built in.
It's like the Sega president coming out at E3 1995 and announcing that the overpriced, yet-to-be-released Sega Saturn has actually already been released and your store is just now learning about it— you're going to be pissed and not do business with them and instead go with the other guy, even if you don't like the other guy. If it's the difference between compromising your morals and going out of business, most capitalist companies are going to go with the former for what should be a blatantly obvious reason. It's like a vegan-raised lion being offered a choice between eating its cornered owner or starving to death.
China has the ultimate wild card, a contempt for intellectual property rights. They can copy and sell all our medicines and medical technology. Africa is going to be a big market, a market that can't afford to pay the added expense that research adds to the production of a new drug.
Trump's position is a lot weaker than he thinks. China has the philosophical principles that would enable them to crush us by stealing our intellectual property. Intellectual property is all America has now and it all depends on maintaining market myths.
Right now, China is still in a much weaker position, as they're facing both food shortages due to a disease affecting pork as well as a demographic crisis. They have to appear strong. Whereas the USA actually is strong. They can't keep depreciating the yuan without undermining their ability to invest and profit from international investments. If that goes on too long, it'll become a runaway cycle that could cause a currency crisis that would threaten to implode their financial system. And there's only so much repression they can do to keep the proles in line. I'm reminded of a tale from the Qin dynasty (notorious as possibly being the first totalitarian regime in history): workers were going to arrive late to work at the quarry. The punishment for showing up late for work? Death. The punishment for rebellion? Death. Well then, if they were going to die anyway... and within a few years, the Qin dynasty was no more.
The irony of history might actually make this a David vs. Goliath situation, because since China has more to lose, they're the ones who are going to fight with the most gusto while the USA will fight the entire thing thinking it's already won just because it is the USA, ignoring weaknesses that China exploits and assuming that our victory is preordained by God anyway so why worry? We don't need allies; we're the United Fuckin' States of America, Bitch! We ought to be able to snap our fingers and make China grovel and kowtow before us, begging for forgiveness.
Pride cometh before a fall...
And the way things are being set up, it's entirely possible the USA and China will take each other out at around the same time.