Who Meets Xi: Common-Sense Trump or Tariff Man?

(Bloomberg) -- It’s occasionally noted that President Donald Trump’s views on trade are among his longest-held. For decades, he has railed against foreigners -- from Japan or China or Europe -- for taking advantage of the U.S. economically while, he claims, American leaders stood by and let them do it.

But as his trade agenda nears a big moment, it’s worth pointing out that despite his experience identifying a perceived problem, his dossier of solutions is less voluminous. So far he has offered two broad and interlinked remedies during his presidency: "toughness” and tariffs. Publicly at least, he has largely steered clear of the details.

That matters a lot this week. At his planned end-of-week summit with Chinese President Xi Jinping in Japan, the answer to the biggest question hanging over his trade agenda may reveal itself: Is Trump a trade pragmatist or an ideologue? Two recent utterances illustrate both sides of that question:

• Leaving for Camp David on Saturday the president spoke about Iran in a way that could just as easily have been about his trade war with China. “Everybody was saying I’m a warmonger and now they say I’m a dove, he told reporters. “I think I’m neither, you want to know the truth. I’m a man with common sense, and that’s what we need in this country is common sense."
• Trump likes his tariffs and says they’re not hurting the economy. This tweet on Sunday suggested an emboldened ideologue rather than someone ready to compromise. “When our Country had no debt and built everything from Highways to the Military with CASH, we had a big system of Tariffs. Now we allow other countries to steal our wealth, treasure, and jobs - But no more! The USA is doing great, with unlimited upside into the future!”

Charting the Trade War

With Trump threatening to increase tariffs on China, Bloomberg Economics used a large-scale model of the global economy to estimate the likely impact. In a worst-case scenario of 25% tariffs on all U.S.-China and trade and a 10% equity market drop, the analysis concludes that the cumulative cost by 2021 would be close to $1.2 trillion in lost output.

Today’s Must Reads

• China’s tech dependency | Advanced technology is at the center of the U.S.-China trade war. Here are the strengths and weaknesses for both sides
• High-stakes meeting | The U.S. and China are discussing the agenda for Presidents Donald Trump and Xi Jinping meeting this week at the G-20 summit in Japan
• Trade war winner | Emerging-market bond fund managers look to navigate trade war turbulence to build on best returns in a decade

Economic Analysis

• How Trump’s tariffs are deadening and divert trade: Economics
• Pacific shipping rates are under pressure amid trade wars: Intelligence
• India’s retaliatory tariffs on U.S. to hurt sentiment : Economics

Coming Up

• Tuesday: Hong Kong May trade data, CPB world trade volumes for April
• Tuesday-Wednesday: WTO members to press U.S. on its farm bailout
• Friday-Saturday: G-20 leaders meet in Osaka, Japan

To contact the reporter on this story: Shawn Donnan in Washington at sdonnan@bloomberg.net

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Brian Swint

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