America’s negotiating advantage over China in trade talks won’t last forever, former CIA director David Petraeus told CNN Business.

“In the short term, the US has enormous leverage,” Petraeus said Thursday during an interview at the SALT Conference in Las Vegas. The retired four-star general pointed to China’s need for the United States to keep buying its goods and the country’s slowing economy.

Political leaders in Beijing “are very concerned” about Trump’s threat to increase tariffs on China as soon as Friday, Petraeus said.

But the 2020 election will soon come into play.

“President Trump has to start worrying about what this does to the economy as he approaches his re-election campaign,” said Petraeus, who analyses geopolitical trends in his role as chair of the KKR Global Institute.

Fears about a deepening trade war sent US stocks sharply lower this week, puncturing a period of calm and optimism on Wall Street.

Fitch Ratings warned that Trump’s proposal to raise tariffs on $200 billion of Chinese goods from 10 percent to 25 percent will damage the economy.

“American consumers will face higher prices and US jobs will be lost if the government’s threat becomes a reality,” Fitch Ratings wrote in a report on Thursday.

It’s unclear whether trade talks in Washington will be successful and forestall the threatened tariffs.

“I have no idea what’s going to happen,” Trump said on Thursday.

China has vowed to retaliate if the US tariffs go into effect.

If trade talks drag out and tariffs ding the economy, that could pose a risk to Trump’s re-election campaign.

“He’s going to run on the economy. He’s made that very, very clear,” Petraeus said. “He constantly stresses how the market is doing under him.”

Trump checks in on financial markets “every few hours” because he knows he can’t get re-elected if the stock market and economy “crash,” Stephen Moore, a Trump campaign adviser, said at SALT on Wednesday.

Petraeus said a “prolonged trade war” would put a “dent” in Trump’s ability to run on the economy.

“He will presumably start to feel some pressure to resolve this issue,” Petraeus said, “and show that the art of the deal is still present in his administration.”

https://edition.cnn.com/2019/05/09/investing/china-trade-petraeus-trump/index.html

 

Category: China


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