Hooray! Trump and Xi Agree to Do Nothing

Trump agrees to not escalate the trade war in return for vague promises.

Investor's Business Daily reports Trump, Xi Agree To Halt New Tariffs To Contain China Trade War.

U.S. President Donald Trump and Chinese President Xi Jinping agreed to keep their trade war from escalating with a promise to temporarily halt the imposition of new tariffs as the world's two largest economies negotiate a lasting agreement.

The truce between the U.S. and China emerged after a highly anticipated dinner Saturday between Trump and Xi on the sidelines of the Group of 20 summit in Argentina. The leaders agreed to stop the introduction of new tariffs and intensify their trade talks, Chinese Foreign Minister Wang Yi told reporters hours later in Buenos Aires.

The White House called the meeting "highly successful," saying the U.S. will leave existing tariffs on $200 billion of Chinese goods at 10% and refrain from raising that rate to 25% as planned on Jan. 1. In exchange, the U.S. wants an immediate start to talks on Trump's biggest complaints about Chinese trade practices: intellectual property theft, non-tariff barriers and cyber theft.

Win-Win

China gets a delay. So does Trump amidst rising complaints from the automotive and farm sectors.

A delay in stupidity is always a good thing. Hooray!

Tariffs cannot possibly work because they attack the symptom of the problem, not the problem.

Attacking Symptoms

Trade imbalances are a symptom of the problem. Attacking symptoms cannot possibly work.

The problem is we have unfettered monetary printing globally, with no controls anywhere. This all started the moment Nixon closed the gold window.​

Total; credit market debt was roughly $1.7 trillion when Nixon closed the gold window. At last report, it was $68.6 trillion. The Fed discontinued the total credit market series in the fourth quarter of 2017.

It takes massive amounts of increasing credit to produce relatively trivial increases in GDP.

We have now have unfunded wars, massive deficits, and a stockpile of $21 trillion in debt. The MMT crowd wants still more debt.

If debt fixed the problem we would not have a problem. The US, Japan and Italy prove debt does not fix the problem.

Gold vs Faith in Central Banks

Everything Under Control?

If you don't think so, buy gold.

Mike "Mish" Shedlock

Comments (10)
No. 1-8
channelstuffing
channelstuffing

DC runnin between $300-400 billion a month in the red in a (pretend) "booming" economy,without massive increases in taxes errrrrrr tariffs,say hello to 2 (3)trillion plus annual deficits.....

shamrock
shamrock

Any agreement with Trump isn't worth jack shit. I give him at most 1 week before he threatens to back out on the "deal". After all, they are robbing us blind.

thimk
thimk

no winners in trade war.

gregggg
gregggg

They couldn't have done this if we were on the gold standard:

karljen
karljen

Gary Shilling predicts the US will win the trade war with China. I think that's fairly obvious and is in sharp contrast to what some here believe.

Escierto
Escierto

Buy gold? Gold is in the toilet and will be for another two years - maybe six if Trump is re-elected. The dollar is King.

Realist
Realist

Delaying the escalation of the trade war is a good thing. Eliminating the tariffs that already exist would be even better. Signing some kind of trade agreement that encourages free trade with China is best. However, even if an agreement is achieved, it won’t change the trade deficit in any significant way. Just as the new agreement with Mexico won’t change the trade deficit there. Trump will say he negotiated “great” deals, but trade figures will show no change.

Advancingtime
Advancingtime

While the US agreed to postpone a planned tariff hike on January first and to keep the rate on existing tariffs at 10% for another 90 days in return for greater purchases of American goods nothing has been resolved. Buying needed farm goods for a tariff time-out in many ways was a win for China.

Still, with less than a month left in the year, many traders are taking this as the green-light for a strong Santa Claus Rally pushing the stock index higher. Beware, this may be short-lived as trader's concerns quickly turn back to the Fed which can now revert back to its hawkish bias and resume rising rates well into 2019. More on how little this changes in the article below.