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A long disagreement over China's trade and economic practices has now become a personal duel and face-to-face between Trump and Chinese President Xi Jinping – and a perilous pivot point for an unstable world order that is changing under the effect of the rise of China.
A Friday trade war day has dramatically increased the political stakes of the Trump confrontation – at the same time, the new tariffs threaten to further harm the US economy.
"This process has become a process with no clear objective, no clear strategy and no clear end result," said Craig Allen, president of the US-China Business Council. "And this is being played out in an increasingly difficult global economic situation, which is an increased uncertainty weighing on an already existing uncertainty."
The president's remark that the trade wars are "good and easy to win" in 2018 seems even less judicious and leaves Trump seem to have organized a confrontation with a growing economic superpower in which it will be difficult for him to triumph.
If China's Friday reprisals were supposed to make Trump more fearful about the state of the US economy – while the growing fear of a slowdown would complicate his hopes for reelection next year – has already succeeded.
Mixed messaging
The new rates came at the end of the week when White House messages on the economy were inconsistent. Trump's contradictory statements have undermined assurances from the President's top advisers that growth is robust and no worries about the economy. no need of them.
The confusion has raised concerns that Trump's administration is ill-prepared to mitigate a recession if one comes along and lacks the stability and calm needed to deal with any financial crisis.
Trump's increasingly furious attacks on Federal Reserve chief Jerome Powell constitute one of the most incendiary speeches of a president on the economy and central bank policy American in living memory. His insistence on reducing interest rates by 100 basis points would mean that the Fed would adopt policies that are generally only put into practice during a severe economic downturn. This also raises questions about Trump's understanding of the infrastructure of the US economy and the independence of the central bank, meant to shield it from interference from presidents worried about their political outlooks.
The latest tariff changes also seem to trap Trump in an escalation with China that will be difficult to control. If he reacts by raising rates, the president is likely to make even more noise among investors and harm American consumers. It has already postponed a series of new tariffs worth $ 160 billion on imports from China in December in order to avoid harming the Christmas shopping season. This decision was seen by many as an admission by Trump that Americans are penalized by the higher price of Chinese products despite its frequent and misleading assurances that only China suffers injury because of tariffs.
"The bottom is sinking and this relationship is getting worse," Allen said.
Since last year, before Trump and Xi only meet around a steak in Buenos Aires, experts worry about the possibility of a new cold war between the two largest economies of the world if they are unable to resolve their differences.
The risk of "decoupling" risks being more disruptive than the agenda of the "America First" president, according to political analysts who closely followed the recurring trade war that began last summer with the first tranche. tariffs.
Administration members, such as Trump's commercial adviser, Peter Navarro, argued that it was necessary to separate from China to ensure US dominance, while other members of the wing expressed concerns about China's military power or its tensions with North Korea.
"I really think that the US-China policy is unified only with one person at the White House," said Scott Kennedy, senior advisor at the Center for Strategic and International Studies, a think tank based in Washington. "It's unpredictable, it can turn around, I do not think US policy has finally settled in a place where we have decided to treat China as a general enemy."
Former Treasury Secretary Hank Paulson warned of the risk of divorce of the world's two largest economies during a speech in Singapore last November.
"I am afraid that large parts of the world economy will eventually be closed to the free flow of investment and trade, which is why I now see the prospect of an economic iron curtain – a Iron curtain that throws new walls apart and demystifies the world economy, as we know it, "said Paulson, former president of President George W. Bush.
Headed to the G7
China 's recent move will probably not improve the mood of Trump, who went to France on Friday night for the G7 summit. He also complained about the European trade policy and has always broken his record in China at international summits, including last year's G7 summit in Canada, which saw him go earlier.
The next time Xi and Trump meet, it will be at the top of the Asia-Pacific Economic Cooperation in Chile in November. But with the continuing worsening of the trade war, the hope of a resolution becomes distant.
Although Xi is often portrayed as a strong, authoritarian and most dominant leader in China over the past 30 years, he is not immune to domestic political pressures.
The wave of demonstrations in Hong Kong puts him under even closer scrutiny months ahead of Communist China's 70th anniversary celebrations – a fact that gives Xi even less leeway. Two years after being hailed as a historical figure and having removed the term limits in a movement considered to be able to let him rule for life, Xi is going through the worst year of his presidency to date.
But the longer the trade war lasts, the more politically delicate it becomes for Trump – a factor that could help shape Chinese thinking.
Confrontation becomes a question of which side can bear the most pain. Trump has confidently predicted that Xi will have to yield because China will not be able to withstand the damage to its economy. It is true that the tariff war had an effect: it allowed to bring the growth of the Chinese industrial production to its lowest rate in 17 years.
But Xi is sitting at the top of an authoritarian system that can muzzle the public and mitigate the political damage of a trade war. He does not need to worry about reelection in 2020. Trump, on the contrary, has been denigrating the media in recent days, accusing him of worrying consumers about the reelection. state of the economy and cause a recession.
Beijing may be calculating that Trump will not be able to withstand the political fire of the trade war as his race for re-election strengthens – a position his increasingly heated explosions tend to support – and may be interested by a decline. As a sign of political sophistication, Beijing has deliberately targeted agriculture – an endemic industry in West Central Swaziland states that Trump must be re-elected.
So, the president is facing a dilemma.
Does he cool the rhetoric and seek an agreement with Beijing – and thus turn his back on one of the central pillars of his entire political project? Or does he continue to fight, even if it has serious repercussions on the US and global economy and creates a political reaction that could cast doubt on his hopes for a second term?
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