China continues to shut the door on Trump in the tariffs war

When it comes to reading Trump and his words, we all know that there’s always going to be two sides to the coin. He loves to make a show of things and be flamboyant. But the truth of the matter is more often than not what he will not portray. It’s all about scoring wins and claiming victory when it comes to the optics. And with his comments regarding China last week, there was that familiar feeling.

Here are some key phrases that he put out in interviews and responses when it came to the trade war with China:

“We’re going to be very nice. They’re (China) going to be very nice. And we’ll see what happens. But ultimately, they have to make a deal because otherwise they’re not going to be able to deal in the US.”

“We just destroyed China who is taking us for a ride and it’s not gonna happen. We’re going to be very good to China. I have a great relationship with president Xi. I think we’re gonna live together very happily and ideally work together. I think it’s going to work out very well. But no, it’s not going to be 145% (tariffs). They will not be anywhere near that number.”

“There was a meeting this morning with China.” (no further details/context)

“Yep. He’s (Xi) called. And I don’t think that’s a sign of weakness on his behalf.”

“We all want to make deals. But I am this giant store. It’s a giant, beautiful store, and everybody wants to go shopping there. And on behalf of the American people, I own the store, and I set the prices, and I’ll say if you want to shop here, this is what you have to pay.”

The final two responses were his answers to the questions “when did he call you?” and “what did he say?”. Two questions. Zero answers. I think we all can extrapolate from that. And China has only gone on to rebuff the underlying situation, even today here.

But reading between the lines, it felt that Trump was trying to work an angle to once again sell his victory lap.

At current tariff levels, US-China trade has been stifled for a number of weeks now. And eventually, something’s gotta give.

The commentary push by Trump above felt like he was going to try and push for a change in tariff levels but yet spin it into a victory. And he still might do that in the coming days/weeks.

But for the time being, China is not going to let him have that satisfaction in getting away with trying to falsely claim a win in this tariffs war. They’re shutting the door hard in refuting that Trump and Xi had spoken and that there were any meetings between the two camps.

That is causing not just markets, but the world, to see Trump’s remarks as misleading and would pour cold water on any form of victory he is trying to claim – if he does try to spin it that way.

As the tariffs war rages on, there’s also a psychological element to it and that is perhaps what we’re seeing above. If neither side can pull off a winning narrative in the short-term, the playbook looks to be working towards tariff exclusions/exemptions. But there’s already a signal that tariffs could be eased soon enough.

And if that happens, expect Trump to boast about scoring yet another win. That even if China continues to keep their door shut.

And as a reminder, a reduction to 50-60% tariffs doesn’t mean that global trade and the world economy is going to find much to be optimistic about in the coming months. There will no doubt be some reprieve for risk trades but the economic pain will be the second wave to think about moving forward.