Trump’s yin and yang game with China

It should be obvious by now — but somehow isn’t. Whenever @realDonldTrump says something wild, you can bet the real Donald Trump is contemplating something sensible — and vice versa. Often the Commander-in-Chief does the opposite to what his social media handle has just said. Trump the Twitterer is the yin to Trump the President’s yang.

One suspects the Chinese, who invented philosophical dualism, have figured this out by now. That might mean Beijing is less freaked by his latest outbursts than the markets, which are sliding.

Coming into the G7 summit this weekend, Trump has been ramping up the trade war: his response to China’s latest tariff escalation. It’s been pretty spectacular even by the 45th presidency’s standards. The Treasury declared China a ‘currency manipulator’ — because, well, it is. Trump ‘ordered’ major American companies to find an ‘alternative to China’.  On Twitter Trump called Xi an ‘enemy’ — only a few weeks after he called him ‘friend’. He also berated the Chinese for not stopping the flow of fentanyl — the dangerous opioid — into America, as they said they would. No military threats yet — but hey, it’s only Saturday morning.

In Trump’s topsy-turvy mind, this all means one thing: he thinks trade peace is about to break out. He’s playing his New York realtor trick: ramp up problems to force a deal. This is Trump’s great game and always has been: the mystery is whether Beijing is playing along. Have they understood the art of his diplomatic deal?

Twitter Trump began his stream of false conscience yesterday by saying: ‘My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?’. LOL! He then announced a 25 to 30 percent hike on $250 billion of Chinese goods and products, plus a 10 to 15 percent hike on the remaining $300 billion. ‘We don’t need China and, frankly, we’d be better off without them,’ he said.

Ignore the noise and look at the timing. The president wrote those tweets on his way to Europe for the G7. Trump always escalates global tensions on his way to these summits. It’s a well-rehearsed routine by now. He wants to ratchet up anxiety among America’s trade allies — to threaten the global order with disorder — so that they in turn can pressure China.

Trump is pushing his madman 2.0 theory (this time it’s on social media) to its limits. If he can convince Beijing that he is sufficiently irrational to crash global markets — despite the fact he needs a strong economy to win again in 2020 — he may well force Xi to concede. We’ve read in recent days that Beijing thinks Trump is weak politically at home: they can read the polls in other words. Do they still think so now?

It’s big and scary stuff — the interplay of superpowers always is. But the yin and yang Trump rule holds. When Trump calls Xi his friend, markets should really be spooked: it means he’s preparing to fire up trade tensions. Equally, when he is threatening Beijing with everything in America’s non-military arsenal, a major de-escalation is on the cards. Will it work? China, famously, thinks in centuries: so we may not know the answer for a long time.

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