Trump sees China as a threat
Trump sees China as a threat and views its technical industrial plan of “Made in China 2025” as a threat to the US economy and national security.
Since January 22, 2018, China and the United States have been engaged in a trade dispute which has played out as a mutual placement of tariffs. In his campaign, US President Donald Trump declared that he would fix China’s abuse of the broken international system. In February of 2018, Trump ordered the implementation of global safeguard tariffs, which places a 30% tariff on solar panel imports. Three months later, the United States filed a request for consultation to the World Trade Organization regarding concerns that China was violating intellectual property rights.
During the past 16 months, the trade war has captured headlines. There were several cases where market participants believed that a deal was imminent. In early May of 2019, the market was pricing in a deal, pushing the S&P 500 and the Nasdaq to all-time highs. It all came apart again with a President Of The United States (POTUS) tweet which alerted the markets that the Chinese were backing down on their word.
What appears to have occurred was a misunderstanding of the impendency of a deal. The Chinese are nowhere near changing their stance on policing intellectual properties concerns. They also do not want a deal with the US to dictate how they will trade with the rest of the world. If an unfavourable deal with the US is consummated, a European and Japanese deal with China will not be far behind.
China also has time on its side. President Xi has no elections in store for the country, while President Trump will need to go to the polls again in November of 2020. Trump also believes that the Chinese want to run out the clock, and to dissuade them from doing this, he is willing to up the stakes.