Page 102 - Bloomberg Businessweek July 2018

◼ AGENDA Bloomberg Businessweek July 2, 2018

▶ Mexico elects its next ▶ China’s central bank will
president on July 1. In his ease bank reserve ratios
third bid for the office, by 0.5 percentage points
populist Andrés Manuel on July 5, unleashing
López Obrador is expected $108 billion of cash.
to win by a large margin.

▶ Xiaomi makes its debut ▶ Iran President Hassan
on Hong Kong’s stock Rouhani visits Switzerland
exchange on July 9, after and Austria to strengthen
postponing plans for a trade ties, a week after
China IPO. pressing Europe’s leaders
to stay in the nuclear deal.
▶ Trump Descends on NATO
▶ Polish Supreme Court ▶ U.S. tariffs against
After disrupting the G-7 gathering in June, the U.S. judges over age 65 have $34 billion of Chinese
president heads for the July 11-12 NATO summit, where until July 3 to retire goods go into effect on
the agenda will largely revolve around containing Russia. or seek permission from July 6. Another $16 billion in
Soon after, Trump plans to get together with Russian the country’s autocratic duties are still undergoing
President Vladimir Putin for their first official meeting. president to stay in office. public review.

◼ THE BLOOMBERG VIEW

A Misguided Trade War China can retaliate in other ways—for example, by obstruct-
10 the U.S. to penalize an equivalent $200 billion in goods. But
ing U.S. companies operating on the mainland, promoting
boycotts of U.S. goods, or throttling the flow of students and
● The U.S. president’s approach to China is a threat tourists to the U.S. China’s ability to thwart Trump’s geopo-
to American prosperity litical goals remains as potent as ever—witness North Korean
dictator Kim Jong Un’s recent surprise visit to Beijing.
There’s no need for this reckless unilateralism. Trump’s
Donald Trump may sincerely think he’s battling to win theory of trade is fundamentally wrong. He sees bilateral
Americans a better deal on trade with China. In fact, he’s trade imbalances as evidence of unfair practices. In a world
making a better deal harder to achieve—and threatening to without tariffs or trade barriers of any kind, a roughly simi-
inflict grave damage on the U.S. economy in the process. lar pattern of surpluses and deficits would still arise. His goal
Even as he escalates the fight over tariffs, the president is of smaller deficits through better deals is simply delusional.
trying to persuade Congress to go along with his decision to Granted, the U.S. has valid complaints about spe-
lighten penalties on Chinese telecommunications company cific Chinese trade practices. In remedying these through
ZTE Corp. That was questionable in its own right (because it cooperation rather than a trade war, it would have many poten-
harmed U.S. credibility in sanctions enforcement), but one tial allies. It would be in China’s interests to do more than curb
possible justification is that it might have encouraged China such abuses at the margin and make largely symbolic gestures
to offer concessions on trade. The tariff fight has most likely on trade, as it has until now. Measures to liberalize finance,
canceled that opportunity, such as it was: No Chinese leader, increase consumption, cut overcapacity, protect intellectual
least of all President Xi Jinping, could be seen to placate property, and streamline state-owned businesses would sup-
Trump under these circumstances. port better-balanced growth as well as allay trading partners.
Meanwhile, Trump’s actions are increasingly hazardous to But that doesn’t change the verdict on Trump. His clumsy
the U.S. economy’s health. If implemented, the latest tariffs— machinations do nothing to advance this prospect. No good
taxes paid in the end by U.S. consumers—would hurt American purpose can be served by taxing trade, rejecting cooperation,
companies and households more than the Chinese. They and isolating the U.S. from its friends. Just how much damage
would be applied in part to finished goods such as electronics Trump might do is starting to dawn on financial markets. He’d ILLUSTRATION BY CHARLOTTE POLLET
and sneakers, directly raising prices for U.S. consumers. be wise to change course before he’s forced to. <BW>
Perhaps the administration thinks China’s ability to punch
back is limited, since the country doesn’t import enough from For more commentary, go to bloomberg.com/opinion