Trump’s Tariff Hike will Return China to the Negotiating Table

The Chinese government suddenly walked away from a trade deal that was close to being finalized because they thought their economy could weather the moderately negative short-term effects of Trump’s initial round of tariffs.

But now that Trump has raised tariffs to a higher level, the cost-benefit analysis has changed to a point where I expect China will return to the negotiating table because the short-term economic costs of tariffs are now higher than the costs of making a deal.

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