Krugman: China tries to teach Trump economics
If you want to understand the developing trade war with
The second thing you need to realize is that
Why haven't the Chinese gone all out? It looks to me as if they're still trying to teach Trump some economics. What they've been saying through their actions, in effect, is: "You think you can bully us. But you can't. We, on the other hand, can ruin your farmers and crash your stock market. Do you want to reconsider?"
There is, however, no indication that this message is getting through. Instead, every time the Chinese pause and give Trump a chance to rethink, he takes it as vindication and pushes even harder. What this suggests, in turn, is that sooner or later the warning shots will turn into an all-out trade and currency war.
About Trump's views: His incoherence is on view almost every day, but one of his recent tweets was a perfect illustration. Remember, Trump has been complaining nonstop about the strength of the dollar, which he claims puts America at a competitive disadvantage. On Monday he got the
Um, what happens when "massive amounts of money" pour into your country? Your currency rises, which is exactly what Trump is complaining about. And if lots of money were flooding out of
Oh well. I guess arithmetic is just a hoax perpetrated by the deep state.
Still, even if Trump isn't making sense, will
Others in his administration seem concerned by
Which brings us to the question of how much power the
America is, of course, a major market for Chinese goods, and
So while Trump's tariffs certainly hurt the Chinese,
At the same time,
And America's ability to counter these moves is hindered by a combination of technical and political factors.
What about a coordinated international response? That's unlikely, both because it's not clear what Trump wants from
So this trade dispute will probably get much worse before it gets better.
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