Post #938 by Goofyhoofy on the Macroeconomic Trends and Risks board

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Trump Has No China Trade Strategy

Washington and Beijing stage a tactical retreat that shows China’s leverage.

President Trump on Wednesday hailed the result of the latest trade talks with China as a great victory, but the best we can say is that it’s a truce that tilts in China’s direction. Details are few, but the countries appear to be resetting their trade relationship to where it was a few months ago before a tit-for-tat escalation. Mr. Trump had agreed to reduce tariffs on China to 30% (55% including those he imposed during his first term) from 145% while China dropped its tariffs on U.S. goods to 10% from 125%. But Beijing continued to leverage its stranglehold on rare-earth minerals …

While they don’t use the acronym in the editorial, the smell of TACOs seems to permeate the air.

Developing an alternative supply will take years and require cooperation with allies because the U.S. can’t produce and process all the rare earths it needs. Japan has pitched a rare-earths alliance as part of tariff negotiations, and the Administration would be wise to expand such a partnership with other allies. This gets to the larger problem with Mr. Trump’s tariff strategy—that is, he doesn’t have one. His latest walk-back shows he can’t bully China as he tried to do in his first term. China has leverage of its own. A smarter trade strategy would be to work with allies as a united front to counter China’s predatory trade practices. Instead, Mr. Trump has used tariffs as an economic scatter-gun against friends as well as foes. This increases China’s leverage, and, like this week’s trade truce, that’s nothing to cheer about.

https://www.wsj.com/opinion/china-trade-talks-dona...

For the record, this is not an opinion piece by some writer they found, it is today’s lead editorial from the Journal’s Editorial Board.

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