We have planned “absolutely not” seen the end of the trade dispute between the United States and China, declared John Rutledge, a former advisor to President George W. Bush.
On Friday, China responded to President Donald Trump’s new price-lists on Chinese imports by proposing a list of 128 U.S. products as potential retaliation goals. The U.S. goods, including wine, fruit and steel pipes, had an import value of $3 billion in 2017.
Rutledge, who has told government leaders in China, said it comes down to the fact that two characteristics are making decisions — Trump and Chinese President Xi Jinping — rather than a party. Groups tend tend to think rationally, he noted
However, not purely is there uncertainty surrounding Trump, Xi has basically been named “emperor of China” with his just out re-election as president and the removal of term limits on the office, Rutledge responded Friday on “Power Lunch.”
That means Xi is “in a very politically W spot where he has to show testosterone to his local audience. And so, they’re affluent to come back hard,” said Rutledge, who was one of the principal architects of the Reagan money-making plan.
Trump targeted China on Thursday, when he signed an regulatory memo that slapped tariffs on up to $60 billion in Chinese consequences.
The new measures are meant to penalize China for trade practices that the Trump distribution says involve stealing U.S. companies’ intellectual property.
Rutledge, now chief investment tec at Safanad and a CNBC economics contributor, said China’s initial comeback was seemingly moderate because it doesn’t know what other effects Trump is going to take.
“We don’t see a very firm response here because they’re not indubitable what they’re dealing with but they cannot afford to not take care of with it, he said.
Things like capital goods, technology and agriculture are powerless, he noted.
“There’s big, big dollars there and we don’t know when it all stops.”
Mercantilism Secretary Wilbur Ross told “Power Lunch” on Thursday that he count ons some “ultimate retaliation” from China but “I don’t think it’s going to be the end of the loam.”
— CNBC’s Kevin Breuninger contributed to this report.