President Trump's Unpredictable Move
Please note that the following isn't a political statement or a criticism. I am not "going there" with today's blog. It is purely about fascination.
For over 1 1/2 years we have been dealing with the uncertainty of the China Trade Deal. The tariffs have hurt the economy in a slow way. At some point it will catch up with us in the form of a recession. The longer this lasts the bigger negative impact it will be. The stock market has been volatile because of the uncertainty. Trade wars do not work for anyone. Plus they have proven to be political suicide. Yet, President Trump was brave enough to put politics aside and go for the home run ball. China has been taking advantage of the system for years. We have paid dearly for it. Something had to be done in a situation where there are no good options. President Trump seem to think that it would be easy. He even made the remark it would be an "easy win."
He brilliantly controlled the optics like no other President. This is his gift. Whether what he says is true or not, he makes you believe it. Personally, I felt like he would have a hard time getting reelected without a China trade in hand. The potential effect on the stock market during an environment that says we are due a bear market and an economy that is on the ropes. A trade war is the last thing we need.
This morning he said this:
“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 will see whether or not the deal is going to be right.”
I don't know if this brilliant or not. This is the ultimate chess game. Obviously, China is not giving him what he wants or there would have been a "phase one" trade deal already finished. Let me point out the obvious - we can't even get a small trade deal done in small phases. So, why did he make that remark? You could come to a lot of speculation on this. I have been monitoring this closely since day 1. This is my conclusion.
He realizes that China has no desire to give the US what we want in a trade deal. It would be to painful for their own economy. I think the whole time China has been playing a game knowing if they worked this the right way they might very well damage Trumps chances at getting re-elected. Then the new President would sweep in and save the day and claim that the new administration got a deal done that Trump couldn't. When in reality, the deal would be smoke and mirrors. The optics would look good and the details would mean nothing.
However, everyone saves face. Politics US style.
Let's assume that he realizes this is happening. How genius is he to take the power away from China and make it his idea to wait? Further he makes the assumption that it is a no brainer he gets re-elected even given the consequences of a Trade war that is slowly creating havoc in our economy.
Checkmate - your move.
Those who control the optics win? It is a big gamble.....maybe the ultimate gamble for the US.