Now, what’s a president to do?
President Trump made a big bet when he said last week that he was going to impose stiff tariffs on billions of dollars worth of Chinese-produced goods.
And, just days later, the Chinese counterattacked by allowing their currency — the yuan — to fall sharply in value. That makes Chinese goods cheaper and offsets the tariffs.
Let’s also not forget that the Chinese, along with the Japanese, are the largest lenders to the US. China owns over $1.1 trillion worth of US government securities and could cause interest rates in America to rise if it became a sloppy and aggressive seller of those bonds.
The US bond market is what Trump ought to be worried about since he wants interest rates lower and the Chinese could cause them to rise sharply.
But our president is probably more concerned with what the stock market is doing. Stock prices have been sliding ever since Trump announced last week that he was going to put tariffs in place on more Chinese goods.
Trump isn’t happy with the way trade talks with the Chinese are going. And he should be unhappy since the Chinese are trying to rope-a-dope him until next year’s presidential election.
The Chinese are hoping Trump loses, and they can deal with someone else on trade issues.
But last week’s stock market weakness was nothing compared to Monday’s when the Dow Jones industrial average fell 767 points to 25,717. Wall Street’s reaction to all this is exactly what the Chinese want — and Trump doesn’t — since our president has always been very concerned about what the stock market is doing.
That makes me remember my last face-to-face conversation with Trump, which happened before he got the title. I warned that he should be careful about creating trade wars and Trump simply said, “Don’t worry.”