Donald Trump and chief officials from his cabinet made statements regarding the trade war with China yesterday. According to them, the US economy is strong enough to survive the dispute. Despite the fact that it is US producers who are paying the tariffs (not China, as the President believes), Trump stated that a recession is not expected and that the trade conflict is not negatively affecting the economy.
Trump also said that he doesn’t want to sign a trade agreement with China just yet. This is because the ongoing protests in Hong Kong. Hong Kong is a separate jurisdiction from China, despite technically being part of the country. People have been protesting against a bill that could potentially jeopardize the independence of the court and allow China to prosecute people critical of the government who are residing in Hong Kong. Trump said he wants to see the Hong Kong protests resolved before he can enter into an agreement with China.
Both Larry Kudlow and Peter Navarro have offered assurances that the US economy is booming and that a slowdown is not coming. However, the US stock markets have been marking losses, while industrial production has slowed, despite wages growing.
Analysts are speculating that the reason Trump and his administration are so insistent on dismissing fears of a recession has to do with next year’s Presidential elections. If the data turns bad during Trump’s presidency, it will expose him to even more criticism from his opponents.
