After a “wonderful and very warm dinner” with China’s President Xi Jinping, last weekend, President Donald Trump launched a barrage of tweets extolling his great accomplishments. The Chinese, he said, had agreed to remove a 40% tariff on American car imports; they would soon start buying US agricultural products; they had apparently made major concessions as part of a 90-day pause in raising tariffs. The stock markets revved up for a big jump, believing Trump’s damaging trade war was coming to an end.
But a serious problem became apparent before long: China was not confirming the details that made Trump’s claims so encouraging. Reluctantly optimistic investors drove the market higher on Monday. But by Tuesday, as China’s state-controlled media specifically noted that there was “no confirmation from Beijing” about parts of Trump’s claims, stock markets fell into a vertiginous downward spiral. The Dow dropped a whopping 799 points.
The next day, China finally expressed optimism about trade talks (without confirming any of Trump’s specific claims) but by then the market had sent two clear messages.
First, Trump’s lies, exaggerations and self-serving boasts may not bother his most loyal followers, but the rest of the world is not a Trump MAGA rally. Everyone else notices that much of the time the President of the United States cannot be believed.