Trump’s timing on the tariffs seems to have been perfect. They went into effect right as China’s economy started to roll over, and more pain is ahead:
China’s economy appears to be slowing faster than expected at the start of the fourth quarter, a bad omen for growth early next year when the full force of the trade war with the United States comes to bear.
Business sentiment in both the manufacturing and non-manufacturing sectors was weaker than expected in October, led by sharp declines in export demand, according to the official purchasing managers’ index published on Wednesday by the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
The figures were the first gauges of the trade war’s impact since the U.S. levied 10 percent tariffs on $200 billion worth of Chinese goods in late September.
That situation could worsen in January, when the tariff on the $200 billion of Chinese imports is set to rise to 25 percent.
The economic forecasts do not take into account the possibility of a large escalation of the trade war.
U.S. President Donald Trump said again on Monday that tariffs on an additional $267 billion worth of Chinese imports — which would equate to sanctions on virtually all Chinese goods — were “ready to go” if there was no trade progress. He said he expected the trade war to result in a “great deal” for the U.S., but did not say how and when that would happen.
So, I’m going to make an early New Year’s prediction. I think sometime in 2019, China’s going to attempt to seize the Senkaku Islands. If the Chinese economy rolls over in a big way, “Emperor” Xi Jinping is going to need some way to regain credibility and distract the populace in a hurry, and seizing Japanese territory will be a good way for him to do that.