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I get your point, but we've been in a historic bull market for well over a decade. Despite all the recent chaos, the S&P 500 is currently higher than it was last August.Originally Posted by Old_pie
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Doesn't look like China is backing down 125% tariffs. Phones and ipads are going to be a bit expensive in the states. Trump seems to be softening his approach praising Xi saying he's an intelligent guy and a deal can be reached. China is far more used to pain and austerity than the people of America. Who blinks first?
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That's an easy one - Trump will blink first. Xi has more to lose, the Chinese will put up with the hardship more (and have less freedom to complain even now) and Trump has a population who are totally gullible, so he can present his eventual climbdown as a total victory without much downside to his national reputation.
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Can't see China having more to lose. If reports are correct then only 2% of China's GDP goes to America. How much does America rely on Chinese production? It's got to be a lot, and more than "Penguin Island" otherwise Trump wouldn't be complaining. But a lot of Amercan products rely on Chinese components and even manufacturer. Indeed, who is going to make Trumps MAGA caps now without costing more?
There's a guy whose name I didn't catch, interviews on BBC News, based in USA but sounds Australian who is an economics expert who said Trump wouldn't/didn't even pass Econ#1. Yesterday he made the simple explanation of the flaw in Trumps trade thinking: The expert says that every week he goes into the butcher to buy meat and then on the way out asks if the butcher would like to equalise the trade by buying some economics expertise. The butcher declines and so the economic experts depart with a "trade deficit". He then returns to his place of work where he does his lecturing and gets paid and is now in a "trade surplus". He would have no gain by imposing tariffs on his butcher, nor would his college gain by imposing tariffs on the consultancy. Indeed it would make absolutely no sense to do so, other than to Mr Trump.
China will not back down - it will be "up yours" in the most polite of Asian manners. The problem is that whilst Trump might want to MAGA, it is, by his definition, NOT GREAT. It does not command the power Trump thinks and that's why he needs to Make America Great Again, but he's going about it in totally the wrong way. I'm now becoming convinced that there is no other way out of this mess other than some commonsense is imposed on the American administration and Trump is given gardening leave on one of his precious golf courses.
But what do I know?
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Trump has less than half the population that is completely gullible, the democrats and the floating voters arent.
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I think that now (as in, right now, not next time trump changes his underpants and his entire trade policy), China has more reason to make a deal than previously. They've been singled out, it's no longer USA vs the entire rest of the world (for now).
However, if I had to guess, I'd say they won't back down. Even if the trade war hurts China more than the US, it can only do so once, and then China's free of US influence for good. On the other hand, even with "just" 10% on everybody, this entire escapade has hurt the US in several ways, and the damage is quite permanent.
Denying Trump a "win" to claim now means in 90 days Trump is faced with the prospect of re-imposing his catastrophic global tariffs, or claiming some lesser "win" against some other nations. China will be fully aware of this, and see it as a reason to dig their heels in now. If your enemy is screwing up, don't give him a ladder to climb down. Make him jump. Of course, other countries could give him a ladder, but the way he's carried on, including claiming they're "kissing my ass" etc, it's going to be politically difficult for anyone to offer him anything he might want.
It's also worth noting that all of Trump's tariffs are in place by a somewhat tenuous measure of exploiting laws that say he can impose tariffs by executive order during "emergencies". The only "emergency" currently ongoing for the US is that there is an imbecile and/or foreign agent in the white house. Now obviously with the current congress and hilariously biased supreme court, this mechanism is fairly sturdy. But in 2026 there are mid terms, the potential is there for these legally tenuous tariffs to be wound back.
Meanwhile China's tariffs are nowhere near that fragile. So while Trump may feel he has the upper hand now, he could well find himself with his tariffs shot down and China's still in place in two years time. China will be fully aware of this possibility, although they tend not to make bets with their policy.
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Trump has changed course and exempted phones computers and chips from tariffs.
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Gosh what a surprise eh?
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Ahah yep.
Bizarre thing to do though. After all, these are the high-tech high value goods that you could imagine Americans manufacturing. But he's cancelled the CHIPS act, tariffed everything, yes exempted phones and semis but the raw materials to make them are now twice the price in the US thanks to the China tariffs. America is now a much worse choice of place to make this stuff than it was a year ago.
I really don't get it at all.
Charitable explanation: he was freestyling, wasn't prepared for such an adverse reaction and got spooked by bond market / stock market / Xi.
Cynical explanation: he knew exactly what he was doing and this was a planned dump and pump (every recession or stock market crash is a wealth transfer from poor to rich as poor people get scared and sell while rich people scoop up cheap assets).
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Ah, apparently they could be subject to new tariffs in the future. More uncertainty.
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