President Donald Trump says trade wars are good and easy to win, but his most effective tactic so far seems to be retreat.
Just 11 days after threatening new tariffs on $300 billion worth of Chinese imports, Trump said he would delay import taxes on toys, electronics, and other holiday-gift-type stuff until mid-December. Stocks rewarded him by recovering some of the losses he inflicted 11 days ago. This is ostensibly a reprieve for American consumers (and, incidentally, puts the lie to Trump’s claim China bears the full brunt of tariffs). But America’s retailers aren’t exactly giddy with relief, writes Sarah Halzack. Yes, their Christmas season will not be completely Grinched. But plenty of Chinese stuff is still subject to duties. And the uncertainty Trump creates with his trade-war “strategy” – as steady as an army of grenade-toting squirrels on roller skates – is bad for business.
Meanwhile, the trade war’s economic damage spreads. Singapore, as plugged into global trade as any nation, gutted its GDP forecast for the year. Dan Moss chalks this up not only to short-term trade pain but also to the growing fragility of Asia’s export-based growth model. Such anxieties still hang over global trade, truce or no.
It probably doesn’t hurt Trump that China is a bit distracted by massive and growing protests in Hong Kong, which escalated even more today. It seems only a matter of time before Xi Jinping cracks down; Trump finds out he’s massing troops nearby. Weirdly, unlike the Tiananmen Square protests of 30 years ago, which riveted American viewers, the Hong Kong protests aren’t getting much airtime, notes Tyler Cowen. The same goes for the fairly large protests in Moscow against Vladimir Putin’s regime. What has happened to America that it no longer cheers on freedom movements?
Maybe it will take even more escalation. Those Moscow protests are limited so far, but the more Putin violently cracks down on them, the more he fuels unrest, writes Leonid Bershidsky.
The trade war is driving down interest rates, with no bottom in sight; for $15 trillion of the world’s debt, yields are already negative. This makes life hard for central bankers, who have little room to cut rates to stimulate economies. If only fiscal policymakers would help out! Incoming ECB chief Christine Lagarde, for example, sure wishes infamously stingy Germany would spend more, writes Ferdinando Giugliano. And Angela Merkel today did hint she might open the government purse strings a bit.
Brian Chappatta writes we need much more government profligacy if we’re to pull interest rates back through the looking glass. Infrastructure spending, especially, gooses economies and rates much differently than, say, tax cuts, by boosting future productivity. And with rates this low, there’s rarely been a better time to borrow and spend.
Far too late, some Republicans are starting to wake up to the need to act on climate change. Better late than never, of course; but the solutions they’ve proposed so far aren’t enough, writes Bloomberg’s editorial board. One relatively simple fix, which should have bipartisan support, is a carbon tax.
Trump and other Republicans might argue we can’t fight climate change and China – the world’s biggest carbon polluter – at the same time. But Hal Brands argues the Cold War showed we can compete with a great power while also cooperating with it in some cases, particularly when those cases involve the, uh, survival of the species.
The reunion of CBS Corp. and Viacom Inc. comes not a moment too soon, writes Tara Lachapelle. In fact, the damage done by their long separation means they’re probably not done cutting deals.
Energy-company CEOs and analysts complain the stock market is dumb for not valuing their companies more highly. Liam Denning suggests the “dumb money” is onto something.
(Bloomberg)
