Trade War — Eyeing Plan B; The Politics of Gun Control
Author: Greg Valliere
August 8, 2019
WITH THE U.S. AND CHINA HOPELESSLY DEADLOCKED on a wide range of crucial trade provisions, eternal optimists like us are asking: is there a Plan B that could cool the tariff war by resolving some issues and continuing talks in 2020 on others? Many officials in the Trump Administration would accept this scenario.
THE PRESIDENT HAS EXASPERATED HIS AIDES by calling all the shots himself, rejecting their advice; all but Peter Navarro urged him to refrain from last week’s new tariffs. But we’re hearing that Trump has been shaken by recent market volatility and is willing to consider a Plan B.
THE FALLBACK: The U.S. could declare a truce on new tariffs, agree to relax curbs on Huawei, and not enforce restrictions that come with the designation of China as a currency manipulator. In exchange, China would finally make huge purchases of U.S. agriculture and other products, would refrain from currency manipulation, and would pledge to open up parts of its economy to American businesses, such as financial services.
BUT PLAN B does not envision quick resolution of other issues, such as Chinese subsidies for state owned companies, technology transfers, thievery of U.S. intellectual property and the creation of a credible enforcement mechanism. Perhaps most disturbingly, there’s one looming wild card that could derail even a modest agreement: the threat that Beijing will move to crush the insurrection in Hong Kong.
BOTTOM LINE: The prospect of a face-saving truce and some modest agreements is the BEST case scenario, and that appears to be many weeks away; talks are still scheduled to resume in early September.
A TRULY COMPREHENSIVE DEAL is nowhere in sight, and neither is an end of the extraordinary market instability, which is likely to maintain downward pressure on interest rates, as investors seek a safe haven amid weakening economic growth, trade wars, and the deteriorating political climate in the U.K., which is lurching toward a messy Brexit.
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THE POLITICS OF GUN CONTROL: What can you say about Donald Trump’s narcissistic visits to Dayton and El Paso — instead of consoling victims and their families, the trip was all about Trump and his endless tweets that mock political rivals. Meanwhile, he’s getting an earful from all sides on gun control, and he may have to take a stance soon.
ABOUT 80% OF ALL AMERICANS favor tougher background checks on gun purchases, but Mitch McConnell will not even consider such legislation, which has passed in the House. Trump has vacillated between the National Rifle Association, which adamantly opposes reform, and his close aides like Ivanka Trump, who are urging him to endorse a bill.
THE LIKELY OUTCOME could be passage of a national “red flag” law that would allow authorities to confiscate guns from mentally unstable individuals. This bill is better than nothing, but meaningful gun control has no chance unless new polls later this week show a sharp drop in Trump’s job rating.
AS WE WROTE EARLIER THIS WEEK, Trump has gone from a re-election favorite after the Democrats’ leftward lurch in the debates to no better than a 50-50 shot. Trump is badly out of touch on climate change, the trade war’s headwinds and the explosive issue of guns and race. His own advisers, sensing these vulnerabilities, apparently begged him to refrain from angry tweets yesterday, to no avail.
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A REMINDER: We won’t publish every day in August, probably just two or three times a week, as this long hot summer comes to a close.
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