President Trump is beating China in a trade war that could continue to escalate in the coming weeks.
On Tuesday, the White House released a new list of 10% tariffs on $200 billion in Chinese goods. This was a direct follow through on Trumps threat that Beijing would be subjected to punitive measures if they retaliated on the first round of tariffs which totaled $34 billion.
Tariffs on this scale, which will now undergo a 2 month review, is basically equal to all the goods that the US imports from China. Trump had promised this retaliatory action as well as pledging to lodge a complaint with the World Trade Organization.
All one needs to do to see who is on the winning end of this trade war, is take a look at the stock market. The market is a direct confirmation that the US is getting to the best of China in regards to trade.
On Friday, the S&P 500 hit a four-month high, following a 1% rally in the prior session. Thursday’s strong numbers also saw the Nasdaq close at a record high. The S&P 500, the Nasdaq and the Dow Jones Industrial Average were all tracking for their second straight week of gains.
The US market’s resilience comes directly after the week in which $34 billion worth of tariffs were placed on China, on top of steel and aluminum levies that were already in effect.
According to Jim Cramer of “Mad Money”, “The intellectual property theft isnot to be trifled with,” Cramer stated in reference to the Chinese practice of forcing American companies to enter into joint ventures and share their technology in order to do business in the world’s second-largest economy. (Source: CNBC, “Cramer: I think Trump is winning the China trade war, and the US stock market backs me up”)
That is the main reason behind the Trump administrations offensive trade stance against China. The White House also claims there is an unfair $300 billion plus annual trade deficit in goods that the US has with China.
This Thursday, former Morgan Stanley Asia Chairman Stephen Roach told CNBC that Trump is on track to lose the trade war due to the US’s strong dependence on for low cost Chinese goods. And without these goods, most Americans will be unable to make ends meet. We will have to wait and see how it all turns out in the end, but if we look at the market as an indicator, the US seems to be in good shape thus far.