President Trump has dug his heels in when it comes to the trade war with China, and according to his former adviser Steve Bannon – there’s “no chance” Trump will back down, according to CNBC.
“China has been running an economic war against the industrial democracies for 20 years,” Bannon said, noting that previous presidents – Clinton, Bush and Obama – all ‘blinked’ when it came to trade with China, adding “Trump didn’t blink.”
“Every president beforehand, Clinton, Bush and Obama, have all blinked. Trump didn’t blink.” Steve Bannon on the current state of trade negotiations with China. pic.twitter.com/tQv9dz5dE9
— Squawk Box (@SquawkCNBC) May 15, 2019
Under Trump, Washington has taken a tougher stance on China compared to previous presidential administrations. In addition to disputes around trade and the alleged Chinese theft of U.S. intellectual property, American intelligence chiefs expressed their distrust of Chinese tech giant and Apple rival Huawei as well as Chinese telecom company ZTE.
US officials maintain that the Chinese stock market and economy has taken a bigger hit than the US, and will continue to be disproportionately harmed by the ongoing trade war.
On Wednesday, China reported unexpectedly weaker growth in retail sales and industrial output for April. As we noted earlier,
- Retail sales rose just 7.2% (against +8.7% in March) – lowest since May 2003 (the 7.2% year-on-year rise in retail sales is actually weaker than all the estimates. The lowest was 7.5%, and the median was 8.6%)
- Industrial Production growth slumped from a hope-filled +6.5% YTD YoY in March to 6.2%.
- Fixed Asset Investment slowed to just 6.1% YoY.
“Investors had been waiting for data to confirm signs of stabilization in the Chinese economy which, in turn, would bolster expectations that the global economy could start making a sustainable recovery,” said Neil McKinnon at VTB Capital. “The recent escalation in tariffs makes that more difficult and can only add to investor risk aversion and increase the risk of a more prolonged economic downturn.”
The negative numbers will add pressure on Beijing to roll out more stimulus as the trade war escalates, while China’s Communist Party has defiantly rolled out national slogans to let the world know they aren’t backing down either (for now).
“Bully us, wishful thinking!”
Trade talks are currently at a stalemate – with the US considering new tariffs on the remaining hundreds of billions of dollars worth of Chinese goods flowing into the US.
Last week, the Trump administration followed through on its threat and increased duties on $200 billion worth of Chinese products from 10% to 25%. On Monday, in retaliation, China announced plans to raise tariffs, some to as high as 25%, on $60 billion in U.S. goods.
Trump’s tweets and tough public rhetoric aside, negotiators for both sides need to get behind closed doors and work hard on getting an agreement, Bannon said. “This is not going to take place overnight.” –CNBC
Trump has shrugged off calls from Wall Street and free-trade legislators to reach a deal – whil Senate Minority Leader Chuck Schumer has urged the president to get the best deal possible.
Watch the rest of the Bannon interview below:
— Squawk Box (@SquawkCNBC) May 15, 2019
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