Trade war resolution on Trump's to-do list

Who is Winning the Trade War?

People love a scoreboard.

Today with the IMF meeting in Bali, we have a chance to assess the current scoreboard in the US–China trade war.

Some would argue that any use of tariffs is always a loss for both sides.

To an extent this is right.

Others would argue that China is winning. Thomas Bernes, a Canadian economic expert and former IMF Executive Director, suggests that:

‘The US is losing the battle to isolate China within the G-20. It has lost the trust and alienated its major partners.’

The Australian Tribune’s opinion is that the answer lies somewhere between a stalemate and a marginal victory for the US.

Here’s why.

Trade war is really a negotiating strategy

First of all, you can only hold this view if you realise that the tariffs are not part of a long-term protectionist stance.

The mainstream media love whipping people up into a frenzy about how Trump is destroying alliances.

A more subtle understanding of international trade requires understanding that a lot of what Trump does is part of a negotiating strategy.

This ‘negotiating strategy’ view is only possible if you listen clearly to what comes out of the White House economic adviser’s mouth.

In this debate, this is the most important person to listen to.

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The mainstream media has persistently refused to publish the comments of White House economic adviser Larry Kudlow, ‘in appropriate context or with enough emphasis’.

On 7 June 2018, when asked about mounting tension within the G-7 and in particular with Canada over tariffs, Kudlow made clear it was a ‘family quarrel’. He said this multiple times throughout the day.

Instead the mainstream media blasted Trump as destroying an alliance.

Simply search ‘Larry Kudlow family quarrel’ on Google and see for yourself.

None of the major media outlets, like The New York Times, CNN, MSNBC or The Washington Post come up on the first page of results.

Four months later, the US agreed to a new trade deal with Canada.

While it imposed new costly rules for auto manufacturing, a deal eventually was struck.

It is much the same with China — although a deal is not necessarily what the US is looking for at the moment.

Trump begins by hitting China with $200 billion in tariffs and China responds with $60 billion of their own tariffs.

The trade deficit increases after this, which the mainstream media claims confirms that the US is losing the trade war.

Trump building an alliance

But behind the scenes things may be changing.

One London-based CEO said that:

‘EU is quietly pleased that the U.S. is confronting China on issues that have also bothered the EU.’

Taken in context we can see that Trump is slowly building an alliance of market-based economies, the vast majority of which are also democracies.

For instance, the new NAFTA or USMCA has a clause that allows any of the three countries to terminate it if they sign a trade deal with a ‘non-market economy’.

I.E. China.

Long-term, the goal from Trump and his advisers will always be greater free trade.

However, it will require some initial re-working of current relationships.

As Kudlow says of a potential meeting between Trump and the president of China at the G-20 in November — ‘Better to talk than not talk, but the talks have to be serious’.

This could be a critical moment in November, and another chance to check the scoreboard.

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The Australian Tribune Editorial

The Australian Tribune Editorial

The Australian Tribune is an unorthodox news service. Your Australian Tribune editorial team deliver the unfiltered stories that could impact your daily life — political and economic stories you’re unlikely to get anywhere else. And we’re not afraid to step on some toes to do it. We are honest, conservative and never dull. We are an independent service, meaning we don’t answer to shareholders or outside advertisers. This helps avoid conflicts of interest that inhibit mainstream sources, which keeps our voice independent. The Australian Tribune is owned and operated by Port Phillip Publishing.
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