Yeah, so when it comes to trade (and really, when it comes to damn near everything) Donald Trump is lot like Rick James. That is, he's a "habitual line stepper."
2018 has been defined by a continual pushing of the proverbial envelope on trade. It started with residential washing machines in January and now here we are six months later with the threat of a cartoonish $800 billion in total prospective fuckery:
Up until a couple of weeks ago, Trump wasn't getting a whole lot of meaningful pushback from America's trading partners who, collectively, tried to placate him. Sure, there was some harsh language tossed about and Trump was issued multiple warnings from Europe and China, but generally speaking, everyone seemingly wanted to hold their fire to see if he would end up coming to his senses once he got the obligatory bluster out of his system.
But over the last two weeks, everyone has reluctantly come to the conclusion that they might end up getting drug kicking and screaming into an actual trade war with an administration that seems hell-bent on proving something to the Roseanne base ahead of the midterms.
The series of escalations that followed after Trump abandoned the truce struck by Mnuchin on May 19 reached comical proportions a week ago, when Trump threatened to slap another $400 billion worth of imports with tariffs in the event Beijing retaliated as promised to the initial 301 levies which are set to go into effect next week.
According to Sassan Ghahramani, CEO of SGH Macro Advisors, Xi is now preparing Chinese officials for a full-scale trade war.
But Trump being Trump, he decided to push the envelope further still by restricting Chinese investment in U.S. industries. As a reminder, the consensus was that he wouldn't stop until there were clear signs that the U.S. equity market was at risk and those signs showed up on Monday.
With Chinese equities in a bear market along with some $8 trillion in other EM equities and with Wall Street having thrown in the towel and branded Trump's (non)strategy a bunch of pipin' hot "covfefe", U.S. stocks nosedived, prompting a damage control effort from Steve Mnuchin and, ultimately, from Peter Navarro himself, who tried a stick save on Monday afternoon on CNBC.
Finally, with emerging markets still in free fall and Hong Kong-listed Chinese equities joining their mainland counterparts in a bear market, Trump blinked on Wednesday morning, deciding against using the International Emergency Economic Powers Act of 1977, opting instead for a "modernization" of CFIUS when it comes to protecting U.S. industries from hostile takeovers by nefarious foreigners who, according to the narrative, all have designs on robbing America blind.
This was immediately seen for what it is: A relent on the part of Trump in the face of what looked like an imminent selloff in U.S. stocks. He tried to step across one more line and it was a bridge too far (to mix walking metaphors).
And while everyone with working eyes and ears knows what happened here, Larry Kudlow was keen to dismiss the notion that Trump had backed down on Wednesday because you know, conciliatory measures and compromise are for losers.
"The idea of softer or harder is really beside the point," Larry, back on the job after surviving a heart attack, told Fox's Stuart Varney today. "That's really not the intent. We're not driving there," he added.
So if you don't mind us asking, where the fuck are "we driving", Larry?
Because a lot of folks seem to think we're just barreling down the highway at 200mph in a semi truck with a screaming maniac clutching the wheel with tiny hands attached to his T-rex arms. And I mean, I'm just pulling that characterization out of thin air, there's no visual evidence to support it.
Kudlow has an answer - sort of. Here's Fox:
Kudlow said the Foreign Investment Risk Review Modernization Act [FIRRMA] is a reform bill that aims to refresh and modernize the Committee on Foreign Investment in the U.S., it should not be viewed as a lighter version which had been reported by some news outlets.
“It’s going to be very comprehensive and very effective at protecting our technological family jewels,” Kudlow said.
So if you roll Larry's comments up, what you end up coming away with is that Trump is still "hard" on China and he's intent on "protecting [America's] family jewels."
'Nuff said. I guess.