Economists are reacting to President Donald Trump’s latest tariff escalation with China, as well as the subsequent walk-back over the weekend, following the sharp selloff in risk assets on Friday.
‘TACO Strikes Again’
On Sunday, in a post on X, economist Peter Schiff said, “TACO strikes again,” a term recently coined by traders and a shorthand for “Trump Always Chickens Out,” referring to Trump’s history of making threats but not following through on them, especially when it comes to tariffs.
See Also: Trump Tariffs On China Have ‘Severely Harmed’ Its Interests, Says Chinese Commerce Ministry: Report
Schiff said this after Vice President JD Vance downplayed Trump’s 100% tariff threat against China, calling it a “negotiation tactic.”
“It's not the best negotiation strategy to let your opponent know that you're bluffing,” Schiff said, while adding that Trump, too, had posted about “his great relationship with China's wonderful president.”
‘It Will All Be Fine,’ Trump Said
In a Truth Social post on Sunday, Trump assuaged investors’ fears by asking them not to worry about China, “it will all be fine,” he said.
He added that Chinese President Xi Jinping “had a bad moment,” and that he doesn’t want a depression for his country. “The U.S.A. wants to help China, not hurt it,” he said, as noted by economist Mohamed El-Erian in a post on X.
American Business Is Reliant On China
University of Michigan economist Justin Wolfers finds the trade relationship between the U.S. and China similar to his “middle school love life,” describing it as being “on one week, off the week, high drama, passing notes, heartache, renewal, gossip,” adding that “we did it all again the next week.”
Wolfers said this on Sunday, in a post on X, which included a snippet of his recent appearance on CNN’s Laura Coates Live, where he warned that businesses are starting to see a pattern when it comes to Trump’s trade overtures. “Eventually they’d understand that you weren’t to be trusted.”
The real concern, he said, is that “American business is reliant on China,” and for the next few years, there will be a “constant threat over the head of any American business that does rely on having reliable access to trade with other countries.”
Read More:
- Trump’s Trade War Gambit: Why America May Lose More Than China in Tariff Escalation
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