Trump’s trade war goof with China is fu­elling chaos

In­vestors are pan­icked over U.S.-China’s short-term 90-day truce on trade is­sues after Dow Jones drops 2,000 points

Waterloo Region Record - - Insight -

From The San Diego Union-Tri­bune: The sharp rise of the Dow Jones in­dus­trial av­er­age since Don­ald Trump’s elec­tion as pres­i­dent in Novem­ber 2016 is some­thing he and his sup­port­ers of­ten cite to show how he has helped the econ­omy — and how, de­spite his di­vi­sive style, Trump’s tax cuts and reg­u­la­tion re­duc­tions have been good for Amer­ica. But the pres­i­dent’s blus­ter about trade wars — “I am a Tar­iff Man” — and the im­por­tant U.S.-China re­la­tion­ship has so far fuelled only chaos. Con­sider this week. The Dow dropped 799 points Tues­day then had a wilder day on Thurs­day, clos­ing down 79 points after fall­ing as much as 784 points.

There’s been global fall­out since Satur­day, when Trump as­serted that Chi­nese Pres­i­dent Xi Jin­ping had caved in his trade war with the U.S. Trump said he’d cut an “in­cred­i­ble” deal in which China would drop a 40 per cent im­port duty on Amer­i­can cars in re­turn for the U.S. drop­ping a planned in­crease in tar­iffs on $200 bil­lion of Chi­nese ex­ports.

Ini­tially, mar­kets around the planet were thrilled by the news — a trade war be­tween Earth’s two big­gest economies cre­ates headaches for nearly ev­ery­one. But as it be­came clear that Xi had only agreed to a 90-day truce on trade is­sues — not re­motely what Trump claimed — in­vestors pan­icked. The Dow has fallen by 2,000 points from its 2018 high, wip­ing out nearly all of its gains for the year. Adding to in­vestors’ wor­ries: the news that Meng Wanzhou, chief fi­nan­cial of­fi­cer of the gi­ant Chi­nese tech firm Huawei, had been ar­rested by Cana­dian au­thor­i­ties at the U.S. Jus­tice De­part­ment’s be­hest, re­port­edly be­cause of Huawei’s break­ing sanc­tions by do­ing busi­ness with Iran.

Given that she is the daugh­ter of Huawei’s founder, Ren Zhengfei, who is revered in China for cre­at­ing a tech be­he­moth that is a le­git­i­mate ri­val to U.S. firms, Bei­jing’s sharp re­ac­tion to her ar­rest was no sur­prise. But the ar­rest only un­der­scored the valid rea­sons that Wash­ing­ton has for be­ing upset with China’s trade prac­tices. China tram­ples on laws and agree­ments it doesn’t like, not just by trad­ing with in­ter­na­tional spon­sors of ter­ror­ism and sub­si­diz­ing ex­ports but by ag­gres­sively steal­ing in­tel­lec­tual prop­erty and busi­ness se­crets from U.S. tech firms. Trump has a case when he says his pre­de­ces­sors let Bei­jing get away with aw­ful be­hav­iour.

But it’s his prob­lem now. He has stated that “trade wars are great and easy to win.” It’s easy to de­clare nonex­is­tent wins. It’s far more dif­fi­cult to sta­bi­lize the strate­gi­cally vi­tal re­la­tion­ship be­tween Wash­ing­ton and Bei­jing with the care and thought­ful­ness it de­mands — and the world needs.

MFC/ROPI TNS

Huawei fi­nance chief Meng Wanzhou was ar­rested in Canada at the re­quest of the U.S.The in­ci­dent is wors­en­ing al­ready strained re­la­tions be­tween the U.S. and China.

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