The Art Of The Trade War

Sun Tzo in the  Art of War states “Appear weak when you are strong, and strong when you are weak”, the first phase of the trade deal just signed might indicate that the Chinese are more closely adhering to confucian game theory than the U.S.. Despite all of the plaudits heaped on this agreement, what we have seen so far  leads us to believe that it was hardly worth all the localized pain that was inflicted on both sides. When you hear (and you will from this administration) that the U.S. was the clear winner due to the billions in  new commodity purchases by the Chinese, be very clear that 1) There are no actual volumes spelled out in the agreement 2) Purchases can be altered due to “market conditions”,  the market conditions being that they can buy them cheaper somewhere  (and they will). It’s no coincidence that phase II( if it ever comes) will come after the election as the Chinese will not be so willing to compromise on real issues like AI and intellectual property.