Some time back, I did a set of articles regarding President Trump’s efforts to get some sort of reasonable parity between the United States and China regarding trade. In them, I predicted that China would eventually back down for a number of reasons, chief among them, is the flight of supply chain from China to friendlier climes, notably, Vietnam and Mexico. I also talked about other factors that would add to China’s burden.
I had also indicated that because of a looming U.S. Presidential election, China might likely wait to see the results or expected results before making its decision, thus putting pressure on President Trump. That paradigm might have just changed with the November Jobs Report.
As reported here, the President Donald J. Trump economy produced 266,000 new jobs in November…well above any expected “bump” from UAW members returning to work after their strike. What does this mean? It means President Trump has huge leverage at the negotiating table with the Chinese.
“This positive number could delay any US/China trade agreement, as signs of a stronger US economy will embolden US negotiators,” wrote Chris Gaffney, president of World Markets at TIAA Bank, in a research note after the nonfarm-payrolls report on Friday.
“As Trump stated earlier this week, he really isn’t in any rush to get a deal done by year end and the positive jobs data should rally the equity markets going into year end,” he said.
CNBC’s Jim Cramer on Friday contributed to that the no-deal idea, during the business network’s coverage of the employment data. “The president can walk away from the table with this number,” he said.
And from the White House head economics guru
On Friday, Larry Kudlow, director of the White House National Economic Council, told CNBC in a phone interview that the case for walking away from a deal if it doesn’t pass muster with the Trump administration is high.
“The president has said many times if the deal is no good, if the assurances with respect to preventing future thefts, if the enforcement procedure is no good, he has said we will not go for it. We will walk away,” he told the network. However, Kudlow did describe a partial pact as “close.”
With this jobs report, accompanied by upward revisions of both the September and October reports, President Trump is under absolutely no pressure to sign any deal with the Chinese that’s he isn’t happy with. As noted by CNBC’s Cramer, President Trump can walk away from this deal at any time…one of the signature tenets of his famous “Art of the Deal.”
The Chinese have two choices. They can deal right now and give Trump what he wants, or they can watch helplessly as he walks away from the table while they continue to hemorrhage foreign supply chain from their country…then give Trump what he wants.
Mike Ford, a retired Infantry Officer, writes on Military, Foreign Affairs and occasionally dabbles in Political and Economic matters.
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