A global economic slowdown is complicating White House efforts to wring concessions from China that satisfy President Trump’s demand for fairer trade.
The Dow Jones Industrial Average
sank 300 points on Tuesday after China reported its slowest economic growth in 28 years. Adding to the market tumble was a report later denied by top Trump economic adviser Larry Kudlow that the U.S. canceled an upcoming trade meeting with Chinese officials.
The setback broke a four-day winning streak and marked the biggest loss since Jan. 3.
Rumors of the canceled meeting came less than a day after Trump tweeted that China “should stop playing around” — wording that suggested the talks have stalled.
China posts slowest economic numbers since 1990 due to U.S. trade tensions and new policies. Makes so much sense for China to finally do a Real Deal, and stop playing around!
— Donald J. Trump (@realDonaldTrump) January 21, 2019
Already anxious about the world economy, investors sold off stocks on Tuesday on the belief the U.S. and China have hit an impasse. Trump had been generally upbeat in his tweets about China in the prior month.
“The trade spat between China and the U.S. is another significant detriment to Chinese growth,” wrote chief economist Chris Low of FTN Financial. He added that U.S. disappointment over China’s unwillingness to get serious about technology theft has “cast a pall over markets.”
In what’s becoming a pattern among senior White House officials, Kudlow took to the airwaves late in the afternoon to deny that the meeting with China had been canceled in an attempt to calm rattled investors.
““There Is no Cancellation. None. Zero,” Kudlow told CNBC. Stocks rallied 100 points after his remarks but still ended sharply lower.
The sensitivity of U.S. and global investors to China trade talks is unlikely to lessen.
Although the president believes the troubles in China give the U.S. the upper hand in trade talks, China has the second largest economy in the world. If it’s growth continued to slow, that will fan fears about the global economy and weigh on the U.S. stock markets.
If there’s one thing President Trump has shown, he is also very sensitive to big declines in the stock market. That helps explain why his tough talk toward the end of last year turned more soothing early in the new year.