Trump’s next tweet to offer big clue on trade war

May 24, 2019 17:51
US President Donald Trump appears to have miscalculated the reaction of the other side in the trade talks. But the same can be said of China. Photo: Reuters

US President Donald Trump always talks about China. He once mentioned China over 30 times in a 35-minute speech. And “China” is all over his tweets.

However, the president has not talked about China in the last 10 days via his Twitter account as the US-China trade war escalated.

I believe it’s a sign the trade war could be worsening, and both sides may have made wrong calculations in their recent moves.

Trump posted his last tweet about China on May 14 (US time). In the nine tweets involving China that he posted that evening, Trump made four main points: The US economy has benefited a lot since Washington slapped tariffs on Chinese goods last year. The United States has nothing to lose in the trade conflict because it has a giant trade deficit with China

The US president also insisted that it was China that “broke the deal” in the trade talks. However, he said his “respect and friendship with President Xi is unlimited”, while assuring that both sides will reach a deal at the right time, possibly on their next meeting.

But something must have changed Trump's optimism after that last tweet, and he has not mentioned China in his tweets until now. The way I see it, both the US and China appear to have made wrong calculations in the process of the negotiations.

Beijing thought Trump would be desperate to reach a deal as he would like to chalk up a major achievement to boost his re-election campaign in 2020. As such, Beijing thought the US was likely to compromise during the talks.

But contrary to Beijing’s expectations, Trump has taken a tough stance and announced the new tariffs on a tweet, followed by a ban on Huawei to ramp up pressure on China.

On the other hand, Trump had expected Beijing to cave in quickly after his new moves as the stakes have gone up. However, China put up a strong stance as well, with Vice Premier Liu He only spending 20 minutes to reiterate the nation’s position during his last visit to Washington.

That has surprised Trump as well. He has never talked about China either on Twitter or in public speeches since May 14. We can see that he has posted much fewer tweets in recent days, probably thinking that blasting China might make things worse. That being the case, Trump’s next tweet about China might have a great impact on the negotiations – as well as the global markets.

A trade war is more or less like a real war. The worst scenario is that both sides would make wrong calculations about each other’s core interests and reactions, leading to unnecessary clashes that might unintentionally trigger a much more damaging war.

The best scenario is that both sides would seek better chips for bargaining, and eventually agree to go back to the negotiation table.

The next tweet by Trump might offer a great clue on how the trade war will develop.

This article appeared in the Hong Kong Economic Journal on May 24

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist