Tuesday , August 3 2021

China tariffs: Auxiliaries turned to cheers to get Trump to expose them

It was a tactic that worked: Trump announced that tariffs would be delayed until December 15.

It was a back-down in the midst of a fierce trade war that Trump insists will eventually benefit the Americans – and will demonstrate his toughness for China. And although that caused markets to rise on Tuesday, gains were erased a day later amid new fears of an impending recession.

He relies on a team that is often at odds with each other and has undergone several changes over the last few months. Trump now finds himself less and less surrounded by those who governed his administration's economic policies for the first two and a half years as worries about a recession grow inside the West Wing.

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Trump and his campaign are counting on a robust economy to get him re-elected. Those voters who approve of Trump’s performance in office say the # 1 reason for why is because of the economy.

With reelection in his mind, Trump boasted about the recent stock market performance during a campaign demonstration in New Hampshire on Thursday night, claiming that even Americans who dislike him have "no choice but to vote" for him, or else the economy will collapse.

"You have no choice but to vote for me because your 401 (k), everything is going to be in the tubes," he told the crowd. "Whether you love me or hate me, vote for me."

Developing economic team

The importance of the economy to his political future has long been an underlying theme in Trump's discussions with his team, said people familiar with the talks, even as the composition of this team changes over time.

His financial economics adviser Larry Kudlow, who is approaching two years on the job, is expected to leave in the coming months. His top economist Kevin Hassett concluded with a promise to be "a resource … from the outside." He is handing out complaints from aides about Commerce Secretary Wilbur Ross, according to officials.

Trump has even been ousted by one of his most loyal Cabinet secretaries, Treasury Secretary Steven Mnuchin, over stopped trade talks with China, officials said. Mnuchin is dealing with an exodus of his own in the Treasury Department, with several top aides leaving in recent months.

Trump has since turned to more hardline aides such as Peter Navarro, the hardline trading and manufacturing consultant who defends his tough move against China and assures him there will be an economic rebound.

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Trump has shown an affinity for aides with an eye for the political implications of economic decisions rather than in-depth knowledge of economic policy, the people said. He has also been annoyed at briefings when the discussion gets too technical or in the weeds.

Mnuchin, who led the financing of Trump's campaign, remains the president's closest adviser on financial issues, according to people familiar with the team's dynamics, even when Trump complains about the lack of progress in trade talks that Mnuchin oversees.

That's partly due to his lifetime in administration, the people said. But Trump also considers his private sector success as implicit proof of his financial advice.

As he was looking for a replacement for Gary Cohn, his first director of the National Economic Council, he was taken by Kudlow, who was a marvel at the time he defended Trump's stance on television.

Trump has also praised Navarro for his sometimes combative appearances on television defending customs, including this week.

A team sometimes at odds

Trump spends the week at his Bedminster golf course, but his financial team is scattered elsewhere. Navarro is in Washington, while Ross is in New York. Mick Mulvaney, the former budget chief who now serves as chief of staff, joined Trump in New Jersey.

Trump's top economic adviser, acting Council of Economic Advisers chief Tomas Philipson, has only been in the top role for a few weeks after the departure of Hassett, who often defended the administration's stance on television. Hassett's departure was seen as creating a void for those tasked with explaining the White House's economic policy, a White House official said.

And Mnuchin has worked from Washington, but is largely unseen in public. He joined a phone call between Trump and CEOs of JPMorgan, Bank of America and Citigroup on Wednesday as markets tumbled amid recession fears.

Instead, Navarro has been the one to defend the administration's position publicly during the week. He is a hardliner over China, and he has often been opposed to more general views on economic policy in debates within the administration and has clashed with Mnuchin during China's trade talks.

On the airwaves, Navarro has reinforced Trump's stance that market jumpers are to blame for the Federal Reserve, which both Trump and Navarro believe doesn't cut interest rates fast enough.

It is not a view universally held in the West Wing, where many economic aides privately acknowledge the ongoing trade wars are more to blame for current economic conditions than anything else. But in conversations, most of the White House still cites the Fed as a contributing factor, knowing that it is the president's position.

The White House plans to get Kudlow, the director of the National Economic Council, to perform some shows on Sunday morning to further explain the administration's position. And Vice President Mike Pence will make remarks at the Detroit Economic Club next week, outlining the administration's financial positions.

A senior official said Trump has been in regular contact with members of his financial team – including Kudlow, Mnuchin and trade representative Robert Lighthizer – from his New Jersey vacation this week.

Recession fear?

While some officials described Trump as shaken by the fresh recession fears that shook the market Wednesday, others said he didn't seem deeply concerned that a downturn might come to fruition in the next two years.

Instead, he has been more focused on what such an economic event – or the appearance one imagines – might have on his political outlook. He has expressed concern that worsening opposition to trade could hurt the economy and cover his chances of re-election.

Although Trump's frustration over the markets is mainly directed at the Federal Reserve, people familiar with the case say he also expected the team tasked with negotiating a trade deal with China so far to reach no deal.

Such a meeting took place last week when the new tariffs that Trump threatened to charge China created a riot among retailers. During the meetings, Trump's advisers warned him that CEOs were prepared to push back tariffs, which should take effect in September, and which would have affected popular Christmas gifts such as cell phones and electronics.

The advisers appealed to Trump's affiliation with the Christmas season, according to well-known people. Trump has boasted of gathering the crowds he saved the festive season from a politically correct "War on Christmas."

Trump tasked his team with finding a way to avoid a backlash to holiday purchases, and advisers recommended deferring customs duty until Dec. 15, when the products on store shelves for the Christmas shopping season had already been shipped.

The decision to postpone new tariffs on China came without any concessions from Beijing.

In a speech on Fox News Wednesday, Navarro called the tariff behind Trump's "Christmas present to the nation."

At the meetings, Trump also expressed hope that the move would shake US-China trade talks, which have been stalled since his meeting with Xi in June, much to Trump's frustration.

But that doesn't seem to have happened. On Thursday, China threatened to retaliate if the United States issues new tariffs on $ 300 billion of Chinese-made products. A statement from the Treasury did not mention the delay.

CNN's Pamela Brown contributed to this report.

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