Despite a flurry of meandering hot-then-cold trade war tweets from President Trump, US futures have been powering higher all morning. But then along came Axios to pour cold water all over the growing trade-deal optimism after the stock market’s worst one-day selloff since January.
According to Axios, senior administration officials told senior White House reporter Jonathan Swan that a trade deal with China “isn’t close” and that the US “could be in for a long trade war.”
Swans’ sources said the differences between the two sides “are so profound taht, based on his read of the situation, he can’t see the fight getting resolved before the end of the year.”
That’s a much longer timeline than the three-four weeks Trump touted Monday night, who touted the possibility that the a meeting with President Xi at the G-20 in Japan next month could yield an agreement.
The White House is already moving ahead with plans to slap tariffs of up to 25% on the remaining ~$300 billion in Chinese imports that aren’t already subject to trade-war related tariffs.
Axios summed up the White House view on China’s position as follows: Beijing only responds to shows of brute force. Trump is also convinced that China will suffer more than the US, since Americans buy more Chinese products than the other way around, but over the weekend, Larry Kudlow said both sides will suffer.
Asked whether Trump “actually believes” that China pays the tariffs and not US consumers, they replied: “Yes, that’s what he actually believes.”
“There’s little point trying to persuade Trump otherwise, because his belief in tariffs is “like theology.”