On Monday the Dow Jones Industrial put up their best gain since October of 2008, notching a 669.4 point increase to close out the day out at 24,203, or a 2.8% increase. The gains come as Wall Street acknowledged the high probability that trade tariffs President Trump announced last week, coupled with the ensuing tariff threats by China, were nothing more than negotiating tactics that have since lead to promising renegotiations.
The gains are welcome after last week’s media reports of a possible trade war with China ignited a rabid sell-off which drove the market down 1,400 points. Last week President Trump announced tariffs on Chinese steel and aluminum as China responded with threats of possible tariffs on various American agriculture exports. The threats were never followed through and China is now undertaking negotiations with the United States.
White House trade advisor Peter Navarro stated that the United States is “talking with the Chinese” and expressed he is “hopeful China will work with us” in order to shrink the $375 billion trade deficit. China is the world’s second largest economy next to the United States. Secretary of Treasury Steven Mnuchin told Fox News the United States is currently attempting to reach a deal with China.
Wall Street realizes that the United States and China represent the two largest economies in the world as investors have settled on the notion that both countries have far too much to lose if the two engage each other in a trade war. Most traders have come to the belief that both countries were making threats as mere negotiating tactics as opposed to a true desire to engage in a trade war.
President Trump also announced an exemption from steel and aluminum tariffs for the entire European Union should they cooperate in pressuring China to make drastic economic reforms. This announcement led Nomura Holdings Chief U.S. Economist to conclude, “Perhaps trade tensions are not quite as high as previously assumed.”
One of the more surprising revelations that have come to light since President Trump engaged China with steel and aluminum tariffs came from the Leader of the State Council of China, Premier Li Keqiang. Keqiang attended a conference of global CEOs in which he signaled China will begin to treat foreign and domestic firms equally and China would no longer force foreign firms to transfer unique technology in order to conduct business within the world’s second largest economy. CNBC reported Keqiang signaled China would begin strengthening intellectual-property rights as to avoid further product infringements on foreign intellectual properties.
Of course, President Trump must take China’s announcement with a grain of salt as China does have a history of making politically expedient comments without ever following through on them. UniCredit Group’s Chief Economist Erik Nielsen stated, “It’s certainly a possibility that these latest U.S. trade policy measures will achieve the desired fundamental change in China’s protectionist policies.” He continued, “China has a bit of a record of pledging changes at politically convenient times, while plowing ahead at its predetermined pace.”
If President Trump can get China to strengthen intellectual-property rights, then that would alleviate a very large burden from the backs of American companies that operate within its borders.
One of the biggest complaints American companies have when trying to enter the Chinese economy is the Chinese government demands any foreign company to hand over unique intellectual property in order to operate within its borders. More often than not, another factory will open nearby selling a cheap knockoff using a foreign company’s unique design.
It takes audacity to suggest the Trump economy is not chugging along at record pace but the media’s decision to ignore the inroads President Trump has made in regards to trade is borderline remiss. Many members of the mainstream media were all too pleased to report the unhealthy pace at which the market reacted to President Trump’s negotiating tactics of slapping tariffs on steel and aluminum. However they are barely reporting the huge gains posted on Monday as China appeared to cave to President Trump’s negotiating platform and fears of a trade war diminished.
The mainstream media is still living within their own bubble and refuse to break out. The number one issue to voters is still the economy. Instead of covering a bustling economy, we have 60 Minutes interview with a porn start that President Trump may or may not have had a consensual relationship with over ten years ago. Here’s a tip to the mainstream media, lave the gossip to Page Six and get back to covering what is important to voters. Here are some words from someone the mainstream media truly admires, James Carville, “It’s the economy, stupid!” Now go cover it…