At G7 Summit, Trump Pivots Again on Trade War, Saying China Wants a Deal

By artappraiser on Mon, 08/26/2019 - 2:25pm |

By Peter Baker & Michael D. Shear @ NYTimes.com, Aug. 26

President Trump expressed confidence that the two sides could agree, calling President Xi Jinping a “great leader” days after branding him an “enemy.”
Wrapping up the summit meeting in France, Mr. Trump said Chinese officials had reached out by telephone. Beijing did not immediately confirm any calls.

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https://www.nytimes.com/2019/08/26/world/europe/g7-trump-china-trade-war.html

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Paul Krugman thread yesterday on Twitter, "it's the uncertainty thing, stupid":

The art of the flail: it seems as if Trump got spooked by market reaction to his tariffs, started to back down, then got furious over reports that he was backing down and reversed course again 1/ https://t.co/0HGdrdVUDs
— Paul Krugman (@paulkrugman) August 25, 2019

There are two aspects to this story. One is that Trump really is melting down at the first hint of adversity. The other is that this kind of behavior is arguably more damaging than straightforward protectionism 2/
— Paul Krugman (@paulkrugman) August 25, 2019

The point is that while a stable protectionist regime makes an economy inefficient, it doesn't necessarily make it depressed. Fewer jobs in export industries, but more jobs in import-competing industries 3/
— Paul Krugman (@paulkrugman) August 25, 2019

Case in point: Britain in the 1950s had high tariffs (>25 percent) https://t.co/Tb59kS4U9K

but low unemployment 4/ pic.twitter.com/HogL7pauHu
— Paul Krugman (@paulkrugman) August 25, 2019

What depresses demand and employment is *uncertainty*. Businesses that depend on imports and/or foreign markets don't want to invest bc Trump might expand trade war' businesses that compete with imports don't invest bc he might not. 5/
— Paul Krugman (@paulkrugman) August 25, 2019

So it's really bad to have a president whose policy is based on his fluctuating moods, which in turn depend on what he saw on TV a few minutes ago. And this effect may extend beyond trade. 6/
— Paul Krugman (@paulkrugman) August 25, 2019

How many businesses will start to wonder whether Trump will "hereby declare" that something they spent billions on is no longer allowed? He doesn't really have that authority, but has a lot of power to muck things up 7/
— Paul Krugman (@paulkrugman) August 25, 2019

And if he's reelected it will be completely unrestrained crony capitalism — except the potential cronies won't want to put money down just yet, in case he isn't. Erratic authoritarians are bad for business, and business may be figuring that out 8/
— Paul Krugman (@paulkrugman) August 25, 2019

by artappraiser on Mon, 08/26/2019 - 2:32pm

Krugman has a few more comments today about the news:

Showing my age: I've been thinking about Trump's approach to trade in terms of Nixon's "madman strategy" in foreign affairs: make people uncertain about how far you'll go as a negotiating tactic 1/
— Paul Krugman (@paulkrugman) August 26, 2019

The idea was that this would make foreign adversaries cautious. A questionable theory even in context. But on trade policy it's an utter disaster 2/
— Paul Krugman (@paulkrugman) August 26, 2019

For it isn't working as a way of pressuring China; as Greg Sargent says, Trump has zero understanding of the political economy (and even Greg doesn't mention the importance of Chinese nationalism) 3/ https://t.co/uQenVQQoQR
— Paul Krugman (@paulkrugman) August 26, 2019

But what it does do is frighten *US business*, which doesn't know where Trump will go next. The result is to freeze plans for business expansion and depress our own economy. 4/
— Paul Krugman (@paulkrugman) August 26, 2019

Serious question about the trade war: what does Trump even want from China? What are the demands any Chinese government could possibly meet? (The bilateral trade balance isn't a policy variable) What would "winning" even look like?
— Paul Krugman (@paulkrugman) August 26, 2019

by artappraiser on Mon, 08/26/2019 - 2:38pm

Trump’s presser confirms it: He has no idea why he’s losing the trade war

By Paul Waldman @ WashingtonPost.com, Aug. 26

by artappraiser on Mon, 08/26/2019 - 3:06pm

Trump made up those 'high-level' Chinese trade-talk calls to boost markets, aides admit https://t.co/GiFa37zscK
— Allahpundit (@allahpundit) August 29, 2019

by artappraiser on Thu, 08/29/2019 - 8:50pm

At G7 Summit, Trump Pivots Again on Trade War, Saying China Wants a Deal

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