Donald Trump thinks China needs a lesson in fair trade practices. Mr. Trump put China on notice when he became president. And he followed through on his promise to throw a monkey wrench into an economic partnership that helped America’s economy rebound in 2008.
The trade war Trump initiated with China will cost Americans more than think, according to several news reports. Putting a tariff on Chinese merchandise hurts, but American corporations that have a presence in the Chinese market fear the Chinese will fight back by making it hard for them to do business in the second largest economy in the world. Plus, Chinese officials may tell the people not to visit the United States while the tariffs are in place. That will cost American businesses millions in Chinese tourism dollars. So Trump is hurting the American economy almost as much as he’s hurting the Chinese economy.
But thanks to the midterm elections, and his fear that the Democrats could take control of the house, Trump let his voters know he’s going to talk Chinese president Xi in Argentina later in November. According to Trump, the Chinese leader may come to the G20 Summit with his economic tail between his legs, and he will agree to Trump’s terms. According to several media reports, emerging market-assets rallied on that news. Mr. Trump thinks President Xi will stop the intellectual property thieves who develop Chinese technology using American ideas and that gave money markets a boost.
The meeting between the two leaders will take place at the G20 Summit. But when world leaders attend a G20 Summit they rarely settle disagreements. They may agree to continue the discussion, or they may offer a new way to solve the issues that create the friction. But no concrete deal between the countries will result from the G20 Summit, according to officials who know how these disagreements get resolved.
There’s no doubt that the Chinese economy needs help. The manufacturing sector dropped to its lowest level ever, in October. And the new consumer-driven Chinese economy can’t make up the losses in the manufacturing sector. The Chinese know how to make economic lemonade out of lemons. They know how to hurt the U.S., but according to President Xi, China needs the United States. But China doesn’t need an American tariff bully telling them what to do, according to the Chinese media.