In a fitting end to a week that was all about Donald Trump tilting at Chinese windmills in an effort to "correct" a problem that, to the extent it exists, isn't attributable to what he seems to think it's attributable to, the USTR was "instructed" on Thursday evening to look into slapping an additional $100 billion in tariffs on China.
This, Trump says, is punishment for Beijing's "unfair" reaction to the publication of a list of products that, if a negotiated settlement isn't reached sometime over the next several weeks, will be subject to some $50 billion in U.S. tariffs.
See in Trump's mind, he gets to unilaterally dictate how global trade is going to work on the way to possibly relegating the WTO to the dustbin of history, and if anyone says or does anything to protect their own interests, well that's "not fair." Here he is tweeting about how unfair the WTO treats him:
It's almost like he's trying to check all the boxes on the "stereotypical bully" list. This is what bullshitters and bullies do - they push people around and then when someone pushes back, they throw a fit.
One of the truly ironic things about Trump's Thursday evening statement (you can read the whole thing at the first link above), is that it directly contradicts what Wilbur Ross said earlier this week. If you recall, Wilbur insisted that no one should be surprised that China responded with $50 billion in reciprocal tariffs. That, he said, was to be expected.
Well apparently Trump didn't expect it (which, again, is typical of how bullies think). Or maybe he didn't expect Beijing to have such a keen read on where to hit him in terms of influencing states that matter politically (it's the soybeans!).
But whatever the case, he's now threatening to use that 301 investigation to justify an additional $100 billion in tariffs and you'd be forgiven for thinking that he actually believes if he just raises the total amount of proposed tariffs to a level that makes it mathematically impossible for China to respond "proportionately", Beijing will just concede that he's the "winner" (click to enlarge):
And yes, that is retarded ("like really retarded - I brushed my teeth retarded, I rode the bus retarded..."), but you cannot rule it out. After all, as I noted this morning, this is the same President that reportedly suggested the U.S. should increase its nuclear arsenal by a factor of ten because he didn't like the look of a downward sloping line chart.
China has already responded to Trump (again), promising him that if he publishes a list of the items that would be subject to any additional tariffs, Beijing will respond "immediately". Oh, and remember how Steve Mnuchin was supposed to be negotiating with Beijing and how Wilbur Ross assured everyone this week that some kind of remedy was in the works (and by "reassured" I actually mean he said that "even shooting wars end in negotiation")? Yeah well China says all of that is "against the facts."
Here's what Chinese Ministry of Commerce spokesman Gao Feng said at a hastily convened press conference (at 8 p.m. in the evening local time on a holiday, no less):
For a period of time, financial and economic officials from both sides haven't had any negotiations on any economic or trade issues.
So someone is (basically) lying here and I'd be willing to bet it's the Trump administration. Gao would ultimately cut reporters off saying he "had some business to attend to."
Yes, "some business to attend to", which could mean talking to PBoC officials about what the next steps are likely to be if Trump does decide to move ahead with the publication of a new list detailing the $100 billion in proposed additional measures. Hint: the next steps could involve devaluing the yuan, a move that would almost invariably wreak havoc across global markets.
But don't worry because despite the fact that Trump continues to make an ass out of him on his very first week on the job, Larry Kudlow tried again to assuage investors this morning, telling Bloomberg TV.... ahhh fuck it. I'm not even going to try. Let's face it: he went on TV and tried to talk around the fact that Trump doesn't have a clue what's going on and is hurtling the world towards economic catastrophe with no regard whatsoever for the consequences of his actions.
Listen to this exercise in verbal acrobatics from Larry and his signature contrasting white collar:
And just to underscore the fact that Larry is in fact not in the loop on this, consider that according to his own account, he only found out about the latest proposed tariffs against China on Thursday night. In other words, he found out about them when everyone else did, possibly on Twitter.
You'll also note from the video clip above that Larry contradicts himself almost immediately. He says "there are always ongoing discussions with the Chinese" only to admit, just seconds later, that "negotiations haven't really begun yet."
Remember what I said earlier this week about Larry? Here, let me refresh your memory:
Sorry, Larry, but Trump didn’t get elected by proselytizing about the relative merits of free trade and globalization.
In fact, he got elected on the exact opposite of that message, so hopefully Larry (and CNBC) will forgive us for suggesting that maybe – just maybe – Trump stuck Kudlow in the NEC position as a placeholder, never intending to listen to him on anything.
I don't know about anyone else, but I don't see Larry lasting all that long in this role.
But hey, at least he'll blow us all a kiss on the way out the door.