China's strike at Trump

The level of Chinese retaliation was the message and of the ilk of the Shoe thrower in Iraq all those years ago.

In Summary

• What is also clear is that China has been very precise and taking aim at the Farm and Oil Economy in particular is designed to strike at Trump's soft underbelly. 

US President Donald Trump
US President Donald Trump
Image: Reuters

''It’s Friday evening in Asia; it’s the weekend. The timing of this news - smack toward the open in America''  tweeted David ingles. The Precise timing of the news that China planned retaliatory tariffs on $75 billion of U.S. goods was deliberate and designed to roil the US markets. China pronounced that it had reinstated tariffs on cars and car parts originating in the US and imposed an  Extra 5% Tariff On Soy Beans and a 5% Tariff On U.S. Crude Oil Imports From Sept. 1. The Chinese have less to work with; They export less than they import which is the crux of the matter for Trump. What is also clear is that China has been very precise and taking aim at the Farm and Oil Economy in particular is designed to strike at Trump's soft underbelly. 

Hu Xijin 胡锡进  who occupies a unique position in China's messaging machine and curates China inc's position in real time tweeted 

China has 'lost' the US already: all-round high tariffs, Huawei ban, political hostility, Hong Kong, Taiwan... We're facing a completely different United States. We have nothing more to lose, while the US is just starting to lose China. @HuXijin_GT

Of course, the level of Chinese retaliation was the message and of the ilk of the Shoe thrower in Iraq all those years ago. 

@IvanTheK put it pithily and tweeted 

''CHINA TO THE CHOSEN ONE: GFY''

The Chinese Renminbi has now depreciated 10% over 12 months and is being used as a shock absorber and a very precise first responder to Trump. 

President Trump who had said previously ‘trade wars are good, and easy to win.’ and only on Wednesday said 

“I am the chosen one. Somebody had to do it, I’m taking on China on trade. And you know what? We’re winning.” 

Of course "I am the chosen one'' became a Meme in the blink of an eye and played to Trump's evangelical base which pays a great deal of attention to the Book of Revelations;

I am the Alpha and the Omega, says the Lord God, who is and who was and who is to come, the Almighty.

President Trump responded overnight 

Trump said existing 25% tariffs on some $250 billion in imports from #China would rise to 30% on Oct. 1, the 70th anniversary of the founding of the People’s Republic of China 

Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter! tweeted @realDonaldTrump.

Furthermore, President Trump threatened to use emergency authority to ''order'' US businesses to cut ties in China. Trump called the Federal Reserve Chairman Powell an Enemy bigger than Xi. 

Trump's newly minted Defence Minister Esper told Fox that the testing of previously banned ground-launched intermediate-range missile and releasing the video of it meant to "deter Chinese bad behaviour" 

This is now a rupture plain and simple. Safe Havens which were already in nose-bleed Territory [Gold, Yen, CHF, Sovereign Bonds] and priced for Armageddon or an Apocalypse Now rallied on the news. The Stock Markets fell sharply. The overarching Question Investors need to ask themselves is this 

Is this a permanent rupture? Or is this a crazy off the charts escalation just before a Deal? The Markets pirouette on the answer to this question.  

The President of the African Development Bank spoke to the negative feedback loop Phenomenon and told Reuters 

The U.S.-China trade war and uncertainty over Brexit pose risks to Africa’s economic prospects that are “increasing by the day” 

“You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the United States and China. All these things can combine to slow global growth, with implications for African countries.”

“I think the trade war has significantly impacted economic growth prospects in China and therefore import demand from China has fallen significantly and so demand for products and raw materials from Africa will only fall even further,” he said.

“It will also have another effect with regard to China’s own outward-bound investments on the continent,” he added, saying these could also affect official development assistance.

There are opportunities for Africa in this rupture and next week I will look more closely at what those opportunities might be.