On the China Tariffs

https://trendmacro.com/system/files/reports/20180322TrendMacroLuskin-59.pdf
Donald L. Luskin
Thursday, March 22, 2018
Trump didn’t take yes for an answer from Li, so now comes China’s threat of retaliation.
US Macro
Asia Macro
US Stocks
Trump has announced tariffs against China to force intellectual property reform, to be specified in 15 days, despite Li’s promises of such reform on Tuesday. Now mid-level Chinese officials have threatened retaliation, focused on US agricultural products. While we respect the risks of a trade war, we see this as a negotiating process that could lead to a long-overdue secular improvement to the terms of global trade, making it more fair and more fully free. Trump’s negotiating style maximizes volatility, driving peace by going to the brink of war. Markets seem to generally understand this, but it entails both higher expected returns and higher expected risks.