Trump loses trade war leverage grip

By Cong Ge Source:Global Times Published: 2020/3/17 4:41:45

Traders work at the New York Stock Exchange (NYSE) in New York, the United States, on March 12, 2020. (Xinhua)

US stocks tumbled Monday morning again. Shortly after the opening bell, the S&P 500 dropped seven percent, triggering the so-called circuit breaker for the third time in March. All indexes pointed lower when trading resumed. 

US stocks have been on a downward spiral, but Monday's drop is significant as it reveals US President Donald Trump's tricks have failed to boost the market. 

On Friday, Trump declared a national emergency over the coronavirus (COVID-19) epidemic, showing investors that he was taking it seriously. Trump was successful in pressuring the US Federal Reserve to cut rates to zero and launched a $700 billion quantitative easing program.

As witnessed Monday morning, voted with their feet, and the results were resounding: Trump has lost his single biggest political talking point ahead of a heated election race without a viable solution to fix it. 

This will not only affect his prospects in November's election but also in his trade wars with China and other countries.

Many in the US are calling on Trump to suspend tariffs on Chinese products, which taxes US importers, to help the domestic economy cope with COVID-19, which has shown no signs of abating. However, it would not be an easy decision for Trump, who has remained steadfast in his trade war. 

Trump no longer holds the favorable position he once enjoyed, when he could get away with indulging in costly trade wars. 

With Wall Street in bear market territory and the economy on the edge of a recession, Trump will face challenges from both his political rivals and within his Republican Party to restore economic order. 

As many have argued, suspending tariffs would funnel billions of dollars into businesses and lift market sentiment. Now, China hawks are arguing this would benefit China, and Trump needs to stay tough on the Asian country. 

The bottom line is that during an election cycle when the economy faces trouble, playing tough with China might not be as convincing to voters as maintaining a stable economy.

The author is a reporter with the Global Times.

Posted in: GT VOICE

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