I jumped the gun in my last post on trade policy. I believed the Trump Administration had reached a deal behind the scenes based on Steve Mnuchin’s comments on Fox News Sunday. Turns out President Trump turned on a dime soon after due to the rampant speculation that he had gone soft on China.
I am 100 percent on board with shaking up the global trading system in order to open up the Chinese market and lower tariffs broadly (including in the US). But I do not agree with the recent moves Trump has made. Threatening to enact a 25 percent tariffs on auto imports, and publicly bashing Canada and the EU for bilateral trade deficits with the US are not helpful maneuvers. China should be bashed on all fronts, publicly and privately. But the US should be negotiating behind the scenes with key allies to lower bilateral trade barriers and aggressively confront China as a group.
But most importantly – for the economy and the midterms – the stock market continues to look thru the aggressive trade rhetoric, implying global trade negotiations will ultimately resolve themselves in an economic- and business-friendly manner.