Donald Trump took the band on tour this week and the first stop was Brussels, where he kicked things off by riffing on one of his favorite themes: The U.S. as a giant piggybank that's being perpetually robbed blind by America's closest allies.
Irony and satire died on January 20, 2017, so Trump is free to accuse Germany of being a Russian "captive" because you know, gas and stuff. Never mind the fact that the same Kremlin-sponsored propaganda tactics that helped swing the U.S. election for Trump showed up in the German elections last September and likely helped the far-Right AfD garner nearly 13% of the vote, a result that complicated an already tenuous situation for the very same Angela Merkel who Trump is now accusing of undermining NATO by paying for Russian energy.
That, along with new defense spending demands, probably would have been enough to give investors and traders pause on Wednesday after an ebullient start to the week, but this being Trump, he managed to push his own bad headlines below the proverbial fold by creating even worse headlines.
Global markets were rocked by the USTR's decision to publish a list tied to a prospective $200 billion escalation in the trade war with China, a move that infuriated Beijing and served as the latest evidence to support the contention that Trump has more on his mind when it comes to trade than bolstering the GOP ahead of the midterms.
In short: it looks like he wasn't bluffing - or at least not entirely.
What he does seem to be doing, though, is timing his escalations to coincide with rebounds in risk sentiment. That is, he's pushing the envelope when markets appear to have stabilized, as they did on Monday and Tuesday.
You'll recall that late last month, the administration was effectively forced to take it down a notch after reports that Trump would use emergency powers to curtail Chinese investment in U.S. industries undercut Wall Street. Steve Mnuchin tried to stop the bleeding and Peter Navarro gave it a shot that Monday as well, but ultimately, it was an announcement made two weeks ago today that tipped a softer approach which rescued the Street.
And although, as mentioned above, irony is indeed dead in the Trump era, there's something amusing about the fact that the latest escalation in the trade war comes exactly two weeks after the administration was forced, by the market, to walk back the last negative surprise on the trade front.
Nothing was safe on Wednesday, as stocks dove from Shanghai to London to New York and commodities suffered their worst day since 2014 amid fears of demand destruction tied to a slowdown in global growth.
Trump would invariably say this is all part of the plan and on Wednesday morning, he took to Twitter to give soybean farmers the school shooting victim treatment - "thoughts and prayers."
Let me finish that for you, Mr. President. You "will open" a "Pandora's box" or a "can of worms" or whatever other metaphor you want to conjure on the way to conveying the idea that these ongoing threats to upend global trade and commerce will end up backfiring spectacularly, on the way to bankrupting not only American agriculture, but also American consumers once tariffs on tradable goods end up laying bare the extent to which globalization has been a deflationary supernova the likes of which Jeff Bezos could only dream of one day becoming.
Now let's see how long it takes before Wilbur Ross shows up on CNBC to explain why anyone talking about a negative impact on the economy from trade frictions "doesn't know what they're talking about."