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Good Read on China / Tariff Situation
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farmer4321
Posted 1/11/2019 21:32 (#7238768 - in reply to #7238607)
Subject: RE: I agree Allison, with one caveat.


Trump has belatedly come to understand just how vulnerable the US economy is to "whatever happens to the Chinese economy". And if he expects to have any chance to be re-elected he has to protect the economy, aka the stock market. Tax cuts are fine & dandy but a 20% tax cut pales in comparison to the market losing 20-40% of its value. The wealthy really won't forgive him for that. I've said before, trump's threat of 25% tariffs on $200 billion in Chinese exports is the economic equivalent to nuclear war. The collateral damage is just too great and now trump understands that himself (I think).
And Allison isn't alone in his analysis of trump. Virtually every political leader who has to deal with trump has come to similar conclusions. As one Chinese negotiator remarked, "we understand that trump needs certain "tweetable deliverables". The deliverables don't have to be substantive, just "tweetworthy". Both Lighthizer and Navarro are desperately on guard for this.
But my caveat is this. Trump can be self-destructive. He's fully capable of taking an action that is completely against his interests, especially in order to spite someone he considers his enemy. That makes him dangerous. The most recent example of this is the government shutdown. The government shutdown comes directly from Pelosi's claim that trump didn't have the votes. To prove to her he did, trump engineered the House bill 695 passed by last session's Congress. And look where that's got him now. He can't back down and he can't win.
I know many of you who might read this, object to what amounts to a political analysis here but the truth of the matter is, whatever your political persuasion, the price of soybeans and by extension corn, no longer depends on market forces but instead power politics.
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