Trump, Xi and the Really Big Deal

 

As Nixon went to China, could Xi come to Mar-a-Lago?

If a big deal is achievable, his chances will never be any greater than now.

Trump’s remarkable invitation to China’s Xi Jinping to attend his inauguration. (Xi is unlikely to come for a multitude of reasons.) 

Trump’s choice of the hedge fund manager Scott Bessent as his treasury secretary rather than a fire-breathing trade warrior adds to this narrative.

Speaking to the Manhattan Institute in the summer, Bessent said this:

I could see in the next few years that we are going to have to have some kind of a grand global economic reordering, something on the equivalent of a new Bretton Woods or if you want to go back like something back to the steel agreements or the Treaty of Versailles; there’s a very good chance that we are going to have to have that over the next four years and I’d like to be a part of it.

Trump told that there needn’t be any tariffs at all if Chinese companies moved production to the US and employed Americans.

The Plaza Accord is seen as one of the essential building blocks for the prosperity the US enjoyed in the later Reagan and Clinton years — although it may not have been so positive for Japan. 

Many around the world have an interest in a weaker dollar as it makes borrowing in the US currency cheaper, and Trump is avowedly one of them.

The yuan now almost as strong as in 2015, when authorities launched a poorly executed devaluation that briefly threatened to throw the world into crisis

Conventional wisdom, which in this case appears to be right, is that inflation was by far the most important issue in winning him the White House. He cannot afford to let prices take off again, and yet tariffs would sharply increase that risk.

One final problem is that a deal would need to involve more than just the US and China.

John Authers Bloomberg 16 December 2024

https://www.bloomberg.com/opinion/articles/2024-12-16/trump-xi-and-the-art-of-the-really-big-deal

Buzz of a 1980s-Style Plaza Accord

https://englundmacro.blogspot.com/2022/05/buzz-of-1980s-style-plaza-accord.html

Tillbaka till Rolfs länktips 16 december 2024

https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-16-december-2024.html