Trade War And No Recession

The United States has gotten itself into a trade war negotiations mess. (See “How Trump’s Trade War Went From Method to Madness”).

There is an old adage: “When you’re in a hole and it’s getting deeper, stop digging!”

Trump and Co. know they’re in a mess but don’t know how to stop digging, so they have been floundering while the adversary (China) outplays the US.

We don’t defend China. It is an authoritarian regime without electoral calendar constraints. And the United States has clear competitive and security concerns. That said, we think the US picked the wrong type of fight and must change its terms to win. We would simply separate intellectual property from soybeans and lobsters and washing machines. Be very precise on targets. And don’t punish Americans with a sales tax masquerading as a tariff.

Here’s one of Trump’s thousands of public pronouncements. Please view this video clip and decide for yourself about negotiations and credibility and consistency. Phase one is not a complete deal. We doubt there will be any longer-term and comprehensive deal. (“Trump Says He Wants a ‘Complete’ Trade Deal with China – Bloomberg”)

We got into this mess because Trump succumbed to poor and patronizing advice. Here’s Navarro’s tariff launching speech to NABE. Navarro is an embarrassment to economic professionals, who now mostly consider him a pariah. His heels are dug in, and he is sinking his president. A year and a half into the tariff war, please listen and decide for yourself. “National Association for Business Economics Conference, Peter Navarro

Here’s the original Lighthizer tariffs list. Please decide for yourself how well the White House has done with the policy application.

Trade wars cost everybody. The IMF estimates that the US-launched global trade war has withered worldwide growth rates by about 1%. And the pain is growing daily.

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Disclaimer: The preceding was provided by Cumberland Advisors, Home Office: One Sarasota Tower, 2 N. Tamiami Trail, Suite 303, Sarasota, FL 34236; New Jersey Office: 614 Landis Ave, Vineland, NJ ...

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