Market Overview

Trump Threatens Additional $100B In Tariffs In 'Clear Extension Of His Brinkmanship Negotiating Style'

Trump Threatens Additional $100B In Tariffs In 'Clear Extension Of His Brinkmanship Negotiating Style'

President Donald Trump and his administration are considering tariffs on an additional $100 billion in Chinese imports. This could be seen as a "clear extension of his brinkmanship negotiating style," according to Height Capital Markets. 

The Analyst

Height Capital Markets' Clayton Allen.

The Thesis

Trump's threat of an incremental $100 billion in tariffs in response to China's ongoing theft of intellectual property is meant to "reclaim the leverage" the president lost to China's retaliatory threat of $50 billion in tariffs of American exports, Allen said in a research report.

Two factors could impact this back-and-forth, Allen said:

  • Domestic pressure on Trump that Chinese President Xi Jinping doesn't have to deal with.
  • Trump's desire to accept negative outcomes in non-trade areas like foreign policy.

It's possible that Trump's new threats are nothing but "shock value" and not the administration's ultimate desires, the analyst said.

China's government is showing little desire to back away and give Trump an upper hand. In turn, Trump could be looking for a "final move" to gain ultimate leverage against China, according to Height. 

The "real danger" to the economy is mostly one of headline risk, Allen said. But another risk is that Trump is "unable to manage the now multitude of contentious negotiations that he initiated."

Price Action

SPDR S&P 500 ETF Trust (NYSE: SPY) was trading lower by 0.81 percent ahead of Friday's market open.

Related Links:

China ETFs Dealing With Trade Tensions

Schwab Strategist: China Needs Intellectual Property Protection

Posted-In: Analyst Color News Futures Politics Top Stories Markets Analyst Ratings General Best of Benzinga


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