Team Trump should be careful what it wishes for on China
Finally, there's the issue of the Chinese economy itself.
Depending on whom you ask, China may have been overdue for a sharp slowdown, or even a recession, long before the trade war began, given its structural problems. But the trade war could tip the balance. It might lead investors to suddenly re-evaluate China's long-term growth prospects, Cornell University professor Eswar Prasad told me.
The global fallout from a Chinese recession would be devastating. It would harm many of our closest allies in East Asia -- including South Korea and Japan -- which count China as one of their most important export markets.
And, of course, there is the fallout for U.S. firms that do business in China. Last week, Apple slashed its revenue forecast, noting that falling sales in China were responsible for more than 100 percent of its global revenue decline. Not because Apple had been directly hit by tariffs but because the Chinese economy was slowing.
"It's not going to be just Apple," White House Council of Economic Advisers chairman Kevin Hassett said the following day. "I think that there are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year until we get a deal with China."
Markets, as expected, plummeted. This was a dunderheaded thing to say out loud, but Hassett was right: Apple isn't the only U.S. company at risk in a China slowdown. Ford and General Motors, for instance, have also seen their Chinese sales plummet.
Maybe, as Hassett and others argue, the prospect of a Chinese recession would be so unbearable to Beijing that its leaders have no choice but to give Trump everything he wants. I remain skeptical, in part because Trump can't decide what he wants.
In the meantime, Team Trump should be careful what it wishes for.
Catherine Rampell's email address is email@example.com. Follow her on Twitter, @crampell.
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