David Petraeus, the previous CIA Director has warned that America won’t always have the advantage during trade talks with China. Right now, the USA has a huge leverage available, due to China’s need for US purchases and its slowing economy, said the general in an interview held at Las Vegas.
Beijing’s leaders are concerned about Trump’s tariffs threats against China, he said.
However, Trump will have to worry about the negative impact on the US economy as the 2020 elections approach. Petraeus is currently the chairman of an international institute, analyzing geopolitical trends.
Fears over another trade war have shot US stocks to new lows, battering Wall Street’s optimism.
Trump’s proposal to increase tariffs by 15% on Chinese goods worth $200 billion would impact the economy negatively, warned Fitch Ratings in its report. It said loss of jobs in the US and higher prices for American consumers are likely if the threat becomes reality.
It is not yet known if the current talks would ease this situation. Even Trump has no idea.
China has declared its intention to respond in kind on US good, once tariffs are in effect.
If the trade war hurts the economy, it could be a major problem for Trump’s re-election. Petraeus commented that Trump was using the economy to support his campaign. His go-to move is to comment on the market’s performance under him.
He checks on markets frequently since he’s aware that the economy and stock market crashing would kill his re-election campaign, said Stephen Moore, who is a Trump adviser, on Wednesday.
A drawn-out trade war could affect Trump’s ability to use the economy’s achievements in his campaign. He would eventually be pressured to resolve it and provide assurance that his economic and financial prowess is still intact in the administration.