The opening of the newsletter earlier today

China made a US soybean order and both sides will continue working-level talks through August. So for the next month at least perhaps the current trade status quo will be stable.

did not even hold up for 15 minutes before President Trump announced new tariffs. Sorry about that.

Donald J. Trump @realDonaldTrump

Our representatives have just returned from China where they had constructive talks having to do with a future Trade Deal. We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing. More recently, China agreed to...

August 1st 2019

6,193 Retweets24,970 Likes

Donald J. Trump @realDonaldTrump

...buy agricultural product from the U.S. in large quantities, but did not do so. Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die! Trade talks are continuing, and...

August 1st 2019

2,483 Retweets8,920 Likes

Donald J. Trump @realDonaldTrump

...during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%...

August 1st 2019

5,412 Retweets22,034 Likes

Donald J. Trump @realDonaldTrump

...We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!

August 1st 2019

5,112 Retweets22,654 Likes

If Trump is hoping the Chinese will cave in the face of this September 1 threat for new tariffs I expect he will be disappointed. This goes against two of China’s core demands -sincerity and removal of existing tariffs-and is humiliating once again to its top negotiators.

It should make any upcoming Beidaihe discussions about the US-China relationship even more interesting, and probably will give Xi more cover, if he even needs it, against any grumbling that he has mishandled the US China relationship. It should be an easy argument to make that no one can manage Trump and so those trying to blame Xi have other, ulterior motives, and that even if China agrees to humiliating concessions there is no guarantee the US side will keep its word.

Given the trade imbalance China can not match this move 1:1. We should expect an intensification of non-tariff measures that penalize American firms and executives.

Such measures include but are not limited to: an accelerated rollout of China’s unreliable entities list; licensing problems; increased inspections; canceled deals, especially with SOEs; enforcement actions; media attacks; nationalist outrage, and harassment or worse of employees of US firms.

I guess the new status quo in US-China relations is that there is no status quo and we are in an increasingly unstable and unpredictable New Era.