Dow Gloom Darkens after ‘Very Happy’ Trump Brags China Tariffs in Billions

By CCN: U.S. President Donald Trump firmly stated his administration will not allow China to emerge as the global superpower and overtake the U.S., indicating that his administration will not compromise to reach a partial trade deal which may have an adverse effect on the Dow and the equities market.

Speaking to Steve Hilton on The Next Revolution hosted by Fox News, President Trump said:

Yes, I do. I think that is their intention [to overtake the U.S.], why wouldn’t it be; they’re very ambitious people, they’re very smart, they’re great people, it’s a great culture, an amazing culture. You know when I had President Xi, I was showing him the Lincon bedroom, the White House, and I said this was built in 1799, you know I think of that as being really old. But, to him, that’s like a modern house.

President emphasized that China was catching the U.S. and was en route to becoming a much bigger economy. As such, the President said he is happy with the tariffs and is willing to remain patient for the right deal.

Is the dow set for gloom after trump’s interview?

Some strategists have suggested that Chinese negotiators may be planning to wait until the end of the presidency of President Trump in 2020 to secure a trade deal with the U.S.

But, President Trump said during the interview that he is satisfied with the tariffs in place, which have allowed the U.S. to take billions of dollars from $325 billion worth of Chinese goods.

He said:

A lot of people won’t be happy with this answer but I’m very happy now. We’re taking in billions of dollars, China is obviously not doing well like us. Since I’ve been President, we’ve made almost $10 trillion in wealth and China has lost $10 trillion in wealth. They’ve lost a tremendous amount. You know, you see what’s happening, their economy is not great, our economy has been fantastic.

In the past month, while the SSE Composite, which includes all stocks traded at the Shanghai Stock Exchange, fell by more than 10 percent, the Dow Jones declined by a mere 2.8 percent.

Still, with President Trump unwilling to compromise and President Xi reportedly preparing for a long trade war, the dispute that may intensify geopolitical risks is likely to have a negative effect on both the Dow and the Chinese equities market.

The Dow Jones has recovered in the past five days

The Dow Jones has recovered in the past five days by 500 points (source: Yahoo Finance)

One source briefed on trade discussions in Beijing told FT:

If the bulk of this agreement is about China doing this and China doing that, that’s totally unpalatable to a domestic audience.

Although the Dow Jones has demonstrated a stunning recovery year-to-date, a part of the optimism towards a full-blown bull market was the anticipation of the establishment of a full trade accord.

With the prospect of a full deal in the near-term largely dismissed and both governments preparing for a long-term dispute, the momentum of the Dow Jones could weaken in the short-term.

Trump won’t let china catch the united states

President Trump noted that China was getting close to beating the U.S. and becoming the largest economy in the world.

“They were catching us. They were going to be bigger than us if Hilary Clinton became President, China would have been a much bigger economy than us by the end of her term. And now, it’s not even going to be close,” President Trump said.

The unwillingness of the Trump administration to back down from its requests for key changes in industrial policies demonstrates the intent of the U.S. to maintain its dominance in the global economy.