Future 101: Tom Friedman on China and the Trade War

[Gadianton]

It's a question of momentum. Can the world turn on a dime? China certainly hasn't been able to re-write the world order while acutely aware of the problem. The US becoming a sudden villain doesn't make China fundamentally trustworthy. They have a massive opportunity, this is for sure.

The irony here is the current administration never needed tariffs to change the balance of trade, they only needed to burn their credibility such that dollars sells off, other currencies rise, and American goods become cheaper. Many finance types talk about the "Mara largo Accord" -- the strategic lowering of the dollar (there's obviously nothing that's played out strategically here, that's for sure, I'm just reporting what's said). However you slice it, the dollar must lower to balance trade, and if that correlates to less faith in the US as a strong institution, then so it was with the more structured Plaza Accord.

Anyway, if the investment types are correct, the current selloff is temporary, and the dollar will rise again. Whether this is due to American strength where America snaps back due to efficient evaluation, or due to the momentum of the world order, and America has the power of a rent-seeker, I don't' know. But the point is, if other nations dig in their heels, and we don't back down either, the belief is that we will crush the world. This is certainly a hollow victory scenario.