Once more into the trade war breach we go — with tweets threatening new tariffs . As confusion mounts over what Liu He, China’s trade negotiator, will (or will not) discuss with his American counterparts in Washington this week, here are three points to note.
First, most US investors and senior executives had cheerfully assumed, until this week, that a deal was imminent. I would wager that most still do, in spite of President Donald Trump’s new tweets. Hence, markets have remained calm(ish) so far. This relative optimism partly reflects the perception that Mr Trump needs to produce a China “victory” to flaunt in the 2020 presidential campaign. But it is also due to experience: last year’s furious shadowboxing around the North American Free Trade Agreement culminated in a deal.
Two years into the Trump administration it seems that corporate executives have moved from alarmed shock into resigned realisation that policymaking is best understood through the lens of World Wrestling Entertainment. A fight starts with a noisy ritualistic bout of aggression and name-calling; it is followed by a dramatic exchange of blows and drives to a pre-determined resolution amid cheers from the crowd.