Let's start with what Trump'w National Economic Advisor is saying today:
"Trump is really the first president to fight back and to put a shot across the bow, stealing intellectual property rights, technology transfers, high barriers, investment limitations, high tariffs – this stuff really is not just unfair, it’s unlawful. It’s outside the boundaries of the WTO. Every country in the world knows this.
Every analyst knows this is the case. Somebody’s got to deal with it. President Trump is going to deal with it. There’s no trade war here. What you’ve got is the early stages of a process which will include tariffs, comments on the tariffs, then ultimate decisions and negotiations. There’s already backchannel talks going on. So look, I understand the stock market’s anxiety. I get that. But on the other hand, don’t over react. We’ll see how this works out.
My view Stu, look, you know I’m a growth guy, I’m a Reagan supply side growth guy. I think that at the end of this whole process, that at the end of the rainbow, there’s a pot of gold. And if you open up that pot, you will see better economic growth, more trading going on, improved wages for both sides.
Anytime you lower barriers, anytime you lower barriers, and that’s the key, the president will say this, lower barriers is the key, don’t raise the barriers. Anytime you do that, it’s good for growth. It’s good for American growth and American workers, it’s good for China’s growth, it’s good for the rest of the world’s growth.”
When you read the contest you can see that Trump is, as the private deal maker he is, just raising the game and not going through the usual channels of the WTO etc.
It is good to recall that the US has won 16/16 claims against China in the WTO and a fat lot of good it did as its consumer manufacturing base was hollowed out.
By way of return, I note that China is being very cautious with its retaliatory tariffs. One sector targeted is Soy Beans, but China imports so much Soy Bean that really, the Tariff's are unlikely to reduce demand and will instead just add to the US tax income. China needs raw materials more than the US needs cheap TV's. Of course, if China targeted iphones then it would be a real threat, as we have seen of late, the millenials can get very voiceferous and excited about access to social media!
So, as is a pattern, the crazed Trump might achieve some of his ends by taking this route. I compare and contrast to Obama, who hand-wringed and talked his way to achieving so little. It is really hard after a year of Trump not to think he is a far better President at getting stuff done. Of course, his tone and associations are dreadful, but his actions do deliver results. This area will be one to watch, albeit the Chinese play a much longer game, much better, as there are no pesky elections to worry about for Emperor Xi.