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    Thursday, April 25, 2024

    China trade war threatens economy, Trump's re-election

    A bank employee counts U.S. dollars next to stack of Chinese yuan notes at a bank outlet in Hai'an in eastern China's Jiangsu province Tuesday, Aug. 6, 2019. China's yuan fell further Tuesday against the U.S. dollar, fueling fears about increasing global damage from Beijing's trade war with President Donald Trump. (Chinatopix via AP)

    It appears President Trump didn’t think this through. How shocking.

    By opening a trade war, Trump calculated he could get China to buckle and come to the table with an agreement under which it would play fair, lifting non-tariff barriers it has erected, such as forced technology transfers and the theft of intellectual property.

    The problem is that Chinese President Xi concluded he had the stronger hand in this high-stakes poker game. There won’t be any disgruntled electorate forcing him out of office. On the other hand, a strong economy — though it has underperformed for the working class — is the one thing that has kept Trump’s re-election hopes alive. If it goes south there is no telling how deep Trump’s approval ratings may sink.

    China knows this.

    Xi would have been willing to make some concessions, with something in return from the United States to save face, but he was not about to give Trump all he wanted so that the American president could lay claim to being the great dealmaker at China’s expense.

    Now things are getting out of control with the threat of pitching the U.S. and world economies into recession. And Connecticut, its economy vulnerable, could well lead the nation into the recession if it happens.

    Wall Street reacted in horror to Trump’s decision last week to impose a 10% tariff on $300 billion of U.S. consumer-goods imports from China. The timing is terrible. Going into effect Sept. 1, it adds concern about back-to-school and holiday sales prospects. U.S. consumers will be paying more.

    China responded by allowing its currency to drop sharply on Monday and announcing its companies had stopped purchases of American agricultural goods, hitting many red states critical to Trump politically.

    The Trump administration countered by pushing more chips into the center of the table, labeling China a currency manipulator. Markets got a brief reprieve Tuesday when Beijing did not announce immediate countermeasures to the White House's designation. Still, all signs point to a long and nasty affair that could drag down both nations' economies.

    President Obama had the better approach, reaching the Trans-Pacific Partnership agreement with other Asian democracies to assert pressure on China. But Trump was hell bent on killing all Obama policies. In this case it may well kill him, politically speaking.

    The Day editorial board meets with political, business and community leaders to formulate editorial viewpoints. It is composed of President and Publisher Timothy Dwyer, Executive Editor Izaskun E. Larraneta, Owen Poole, copy editor, and Lisa McGinley, retired deputy managing editor. The board operates independently from The Day newsroom.

    Comment threads are monitored for 48 hours after publication and then closed.