Sounding Off on the Latest China/Trump Trade Thoughts

I learned a lesson recently, and that’s thanks to you, the Afternoon Edition reader.

That lesson is … if you want to get an audience interested, write about China, Donald Trump and trade policy.

That’s what we did last week with our article, “Trump: The Two Sides of a Chinese Coin,” as well as with Tuesday’s article, “China Warns Trump About a Trade War.”

The former was all about what I think is an encouraging sign that the president-elect is talking to China’s premier business leader, Alibaba’s (BABA) Jack Ma, about ways they can expand U.S./China commerce.

The latter was more about the warning sent by Chinese President Xi Jinping, who took to the podium at the World Economic Forum in Davos, Switzerland, to defend economic globalization.

Xi also took a direct shot at the president-elect, saying that no one will emerge a winner in a U.S./China trade war.

Well, readers had a lot to say on both fronts, so let’s find out what the mood out there is.

Regarding the Ma and Trump meeting, Mike writes:

All this is a smart play to leverage what we offer the world. If I were a CEO of a foreign company, I would be knocking on the door through Donald Trump. It is not what you say … it is how you say it and who you present you plan to. Pretty darn simple. No Master’s degree needed.

Plmw writes:

Everybody got points after the Trump/Ma meeting. But (then) there’s the details. The Chinese Post subsidizes shipping from China outward for goods sold on Alibaba, but won’t for shipping to China from the U.S. So, shipping costs provide a barrier to some degree. Then there’s all the fraudulent goods sold on Alibaba — will our Midwesterners want to share that platform? So don’t count on a million jobs just yet.

Brad response: Indeed, the details definitely matter here. And as Plmw writes, we are also not counting on those million jobs created just yet. I also agree with Mike, as from a business perspective, high-profile CEOs of all stripes have a lot to gain by knocking on Donald Trump’s — and by extension the U.S.’s — door.

Not surprisingly, the real fireworks took place on the issue of Trump, Xi and a trade war with China.

Here’s a very thoughtful response from Alex, who writes:

Firstly, I am not a fan of Donald Trump. But, as a business owner, I understand that when negotiating (for example) for the prevention of a price hike from your supplier, you need to be prepared and have something to counter back to the proposed price hike. Today, the USA has no cards to play with China, or with anyone else in the world.

Trump is quickly trying to make enough noise to “get some cards back” so that when he negotiates, he gives back the only thing he has, and that is his newly acquired cards. In the meantime, he has to improve the U.S. business climate so that we change from one of the worst places to do business to one of the best.

And with business flourishing, Americans will make more money and will spend more money. Besides, if a U.S. company makes profits abroad, they should be given a prize for bringing money back to the U.S., and not penalized with a second tax at home.

Another thoughtful response comes to us from Joe, who writes:

Trump is a businessman first and foremost. He’s going to do what is good for the business. In this case, the United States of America. He’s going to want to talk with leaders of other countries, expressing his concerns (about) a particular country’s relationship with the USA. That can be good. It can clear the air, and potentially lead to improved relationshipseconomic, strategic and otherwise. He likes to keep the other side off-balance because, he feels, it gives him some type of advantage.

Yet another good response was sent by Tim, who writes:

Because of poor, weak leadership, China has had their way with the U.S., and we’ve helped to build their economy. I’m sure they feel a little threatened their huge trade imbalance may change with Trump. It’s about time they have some competition. They have all but pushed the U.S. out of the way… Before we can export anything, we must have industry in the U.S.. Hats off to Trump for being proactive on bringing jobs back and companies back to the U.S. I hope he continues.

Brad response: Each of these responses brings up great points about the complicated issue of trade. It’s an issue that strikes at the heart of our national identity. Yes, we want U.S. industry to thrive, but we also want U.S. consumers to pay as little a price for goods and services as they can. Those low prices help keep inflation at bay, and interest rates low.

However, high-paying U.S. manufacturing jobs also help the country at large, and we all like the idea of high-paying, blue-collar jobs in places where the economic climate has suffered for far too long.

Finally, there was this response, which put a smile on my face, and which made me feel very good about the work we do here each day.

Ron S. writes:

First, let me say Brad that you offer the best thought-provoking and bias-free topics for discussion. When listening to and reading Trump comments, I have to stop myself every time and remember he is a salesman first and foremost. He throws out lines and, based on responses, he judges where the deal boundaries lie. If you go back to his earliest comments to his present comments, you notice how those boundaries have narrowed.

I do not think he is making a fundamental change to his goal but rather has narrowed down how far in each direction he can go. Much like a car salesman who with casual conversation tries to determine if he can upsell you one or maybe two models, or if he will be lucky to even sell you the model you are looking at. Obviously, the Presidency is more complicated than selling a car (and I by no means want to demean the new president). But if he wishes to get a better trade deal for the country, he uses the same basic techniques; toss out a wild idea, gauge reaction, narrow the scope of his goals and fine-tune his approach.

Brad response: Thank you, Ron, for the compliment, and for a most-interesting analysis of Trump on this issue. I think it’s safe to say that we have a “Negotiator-in-Chief” coming into office Friday, and that is going to be an interesting show for us all to watch in the years to come.

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Let’s keep the conversation going. If you want to weigh in on the China/Trump issue, or any of the issues we cover here in the Afternoon Edition, then go for it! Moreover, doing so is as easy as leaving me a comment on our website or sending me an e-mail.

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Stocks saw a mixed day amid remarks from Fed Chair Janet Yellen and President Barack Obama, who held his last news conference as commander-in-chief. The Dow dipped 0.1% and the S&P 500 rose 0.2%.

• Netflix (NFLX) shares are up 8% after-hours. The company said it added 1.9 million U.S. subscribers last quarter, blowing past analysts’ estimates of 1.4 million, Revenue came in 36% higher quarter-over-quarter at $2.5 billion.  The company also said it plans to spend $6 billion in 2017 on original content, an additional billion over 2016.

• Goldman Sachs (GS) may have reported an ‘exceptional’ fourth quarter, but shares dropped 0.6% today despite reporting a 12.4% year-over-year revenue increase and an 8.5% quarter-over-quarter EPS increase.

• Citigroup (C) fell 1.7% even after reporting a 31% increase in trading revenue. But it missed the mark on equities trading revenue, and companywide revenue fell 8%. However, net income in its institutional group rose 97% to $2.5 billion.

Good luck and happy investing,

Brad Hoppmann
Publisher
Uncommon Wisdom Daily

Your thoughts on “Sounding Off on the Latest China/Trump Trade Thoughts”

  1. i hope you are right about the inauguration brad. its not gonna be easy with the mass protests organised. i think that the next few days will be ‘historic’ in many ways. this event could be a real ‘blockbuster’.

    even hillary has said ‘let it be’..the inauguration, as we live in a democracy..of sorts. the election was had and won, despite all kinds of accusations of hacking etc.

    but,…… many blindsided people will not ‘let it be’. it is a shame that the venom against trump will be vented by 100 s of thousand of ‘sour grapers’ demon..strating against the placing of the american president-elect into the white house.

    “it could only happen in america” ..a famous saying from ‘f’ troop (chief wild eagle). what to do? wait and see. obama? he won’t go away! martial law? very likely . batten down the hatches lol

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