According to Treasury Secretary Steven Mnuchin yesterday, a U.S./China trade deal is “90%” complete. But now, some new perspective on the highly anticipated G-20 summit has affairs looking a little less certain.
CNBC reporter Kayla Tausche broke what sounded like troubling news earlier this morning, citing a White House insider who thinks Xi and Trump are still too far apart in negotiations for an agreement to be struck.
China wants a “balanced” trade war conclusion – including clear concessions from the United States.
Meanwhile, U.S. Trade Representative Robert Lighthizer says balance at this point is impossible due to China’s past trade transgressions.
Specifically, the U.S. trade contingency wants China to pay for decades of state-sponsored intellectual property theft. Especially regarding new technologies – one of America’s biggest competitive advantages.
Up until now, Trump’s strategy to exact revenge revolved around the levying of hefty tariffs. They’ve certainly put China on the ropes, but with the trade war entering the “championship rounds” as we approach 2020, the President is seeking a knockout blow.
Even though he’s playing it cool for the press.
“They want a deal more than I do,” said Trump to Fox Business.
And as reported just recently, his top economic advisor, Larry Kudlow, revealed that there are “no preconditions” set for the upcoming G-20 trade meeting.
Moreover, the White House is prepared to move forward with additional tariffs.
With both sides upping the ante more and more as the summit approaches, it feels as though a trade war conclusion is less likely than originally anticipated.
Or, perhaps, its simple posturing.
Either way, the truth is that before China signs on the dotted line, they simply want more. More freedom to do as they please, more unfair trade advantages.
More ways to expand their sphere of influence.
For years now, the Chinese Communist Party has used both military and economic intimidation to dominate the Far East. They’ve been parking battleships on the coasts of trade partners, offering “security” for doing business with Xi & Co.
Back in the 20s, that was how the mafia gained control of otherwise legitimate businesses.
These days, racketeering is, according to China, a defensible trade strategy.
What many analysts have missed about the trade war is that it isn’t just concerning deficits, tariffs, and I.P. theft. Those are certainly important, but there’s something far bigger at stake and more geopolitical in nature.
What we’re witnessing right now may be (hopefully) as close as we’ll ever get to another Cold War. Much like they did back in the 80s, the U.S. is trying to prevent communism from spreading.
And while it’s not “true” communism, it certainly resembles the old-school Russian version in many ways – complete with a civil liberty crushing, oppressive government.
Yes, China’s continued raiding of American tech companies is unsustainable if the U.S. wants to stay on top.
But what’s even worse for the Western World long-term is a reborn U.S.S.R. – a coalition of Chinese-sponsored nations, tethered to a ruling class of robber-baron oligarchs.
It’s a dystopic future by every stretch of the imagination, and one that thankfully, can be avoided as long as the U.S. persists in putting China’s feet to the fire.
If Trump walks away from the G-20 summit with a “balanced” trade deal, the market may rise short-term, with investors seeing it as a “win”.
But the long-term effects of such an agreement would be catastrophic. For that reason, a balanced conclusion should not only be unsatisfactory, but simply unacceptable for any prosperity-loving citizen of the free world.
