Much to the surprise of many investors, President Donald Trump followed through on his threat to increase the 10% tariff on $200 billion of Chinese imports to a 25% tariff. So much for the art of the deal.

The President is sending mixed signals as he talks about possibility of agreement but he also talks about a new program to buy agricultural products from American farmers to distribute as food aid around the world. That would require appropriating funds and another issue is that American farmers have always preferred the greater reliability of trade to aid. In the 2018 election Republican support faded in farm country, and a long term escalation in the trade war could have negative political repercussions for Trump in 2020.

However, no candidate better knows how to communicate with his base than the president. The "tough on China trade" stand steals a page from the Democratic playbook. Trade, like infrastructure and prescription drug pricing, is an issue where Trump's ideology is more in line with Democrats than free-trade Republicans. Democrats will have a tough time attacking Trump on trade policy, giving him plenty of maneuvering room.

Democrats are so focused on Trump, that House legislation to strengthen the Affordable Care Act has received little attention. Hous...

Unlock this article with a FREE 30-Day Trial!

No Credit Card Required! Limited time only!

An FSI Pro, FSI Macro, or FSI Crypto subscription is required in order to access this content.

*Free trial available only on a monthly plan

Disclosures (show)

Get invaluable analysis of the market and stocks. Cancel at any time. Start Free Trial

Articles Read 3/3

🎁 Unlock 2 extra articles by joining our Community!

You’ve reached your limit of 3 free monthly articles. Please enter your email to unlock 2 more articles.

Already have an account? Sign In

Don't Miss Out
First Month Free