Friday , 23 August 2019

Lloyd Blankfein Is A Trade Warrior Now

The fallout from the collapse of the trade deal with China has created some unlikely bedfellows among those who have publicly backed President Trump’s decision to push for the “great” trade deal that he promised – or walk away.

That dynamic was on full display Wednesday morning when Steve Bannon appeared on CNBC to discuss the importance of Trump’s trade fight, and guest host Tom Friedman – yes, that Tom Friedman – said he agreed with the entirety of Bannon’s position.

Even Chuck Schumer has urged Trump not to capitulate and to make sure the US gets the best deal possible. Mitch McConnell, on the other hand, has stuck to somberly reminding the world that a trade war would produce ‘no winners’.

Before Bannon’s appearance, former Goldman Sachs CEO Lloyd Blankfein, a Wall Street titan whom one might expect to be firmly in the ‘free trade’ camp, issued a series of tweets where he effectively came out in favor of Trump pressing ahead with more tariffs. He compared the tariffs to a “labor strike” and said they might be an effective negotiating tool.

Furthermore, Blankfein played down the impact on consumers by arguing that Americans might switch their purchases to domestic companies or non-Chinese companies (or at least companies that don’t source their products from China).

Tariffs might be an effective negotiating tool. Saying it hurts us misses the point. China relies more on trade and loses more. As in a labor strike where mngmnt & workers both get hurt, the process may demonstrate relative strength & resolve & where compromise needs to happen.
— Lloyd Blankfein (@lloydblankfein) May 14, 2019

As to who ultimately bears the tariffs cost: US buyers may eventually switch their purchases to domestic or non-Chinese companies (and pay a bit more than now). Chinese companies lose the revenues. Not great but part of the process to assert pressure to level the playing field.
— Lloyd Blankfein (@lloydblankfein) May 14, 2019
So that’s Trump, Blankfein, Bannon, Kyle Bass, Friedman and Schumer on one side, and most of Congress (including McConnell), Wall Street and the Chamber of Commerce on the other.

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