Now it's full steam ahead for Trump's trade war with China

pulse

November 10, 2018 3:14 PM

President Donald Trump's trade war with China could get even worse now that the midterm elections are over and more tariffs could be on the way.

The midterm elections will have a significant imprint on the policy course of the next two years, as the GOP push for more tax cuts, Obamacare repeal, and other wish-list items will likely be stymied by the Democrat-controlled House.

But the gridlock coming to Washington is unlikely to slow down one of President Donald Trump's newest and most impactful policies: the trade war with China. Analysts and economists say the president may even double down on the fight with Beijing.

"China trade tensions will continue and possibly worsen," said Isaac Boltansky, a policy analyst at research and trading firm Compass Point. "We believe the electoral split-decision will result in President Trump’s trade rhetoric — especially with China — becoming more bellicose in the weeks ahead."

For his part, Trump suggested a possible deal with China during a post-midterm press conference on Wednesday.

Boltansky noted that the complexity of the disagreements between the US and China, which leaves little hope for a quick deal. And he said that both Trump's and Xi's stubbornness makes it less likely that the two sides can come to a resolution anytime soon.

There are also reports that the US is preparing tariffs on all remaining Chinese imports not already caught up in the conflict — some $257 billion worth of goods.

Trump has nothing to do but fight China

The Democratic House takeover may actually mean less likelihood of congressional intervention to stop the trade war.

Democrats have been historically more skeptical of free-trade deals, and many party members have been sympathetic to Trump's tough talk on China.

The Democratic House triumph will also leave Trump with few policy options to focus his attention, said James Knightley, chief international economist at ING.

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