Trump’s “America First” Pledge Stirs Backlash from China

While President Trump’s inaugural address has elicited a hopeful feeling among his voter base, reactions from the Chinese to his message have been far from warm. According to Josh Chin’s January 23, 2017 article in The Wall Street Journal, in a speech delivered to the World Economic Forum, Chinese President Xi JinPing cast aspersions on the trade protectionism against imports that Donald Trump has promised America.
trump and china
In a follow-up comment to Mr. Xi’s speech, Zhang Jun, head of the Chinese foreign ministry’s office of economic affairs, equated trade protectionism to “locking oneself in a dark room.” The comment was a thinly veiled slam at Donald Trump’s stated intention to fine America’s imports, including those from China.
Also, China is upset at the possibility that President Trump might now brand them as a currency manipulator because they have deliberately suppressed the value of the yuan to encourage additional exports.
Mr. Zhang has also wryly suggested that, given the U.S. president’s remarks, China may be forced into assuming the role of the world’s economic leader, since the U.S.’s new stance (in his view) will automatically make it a follower among nations.
Economic friction between the United States and China is certainly not new. Analysts have railed against the nation’s subsidies to some of its companies — subsidies that undermine the value of American imports. And China’s theft of America’s intellectual property has become a common complaint of United States companies. But a contentious Trump administration has propelled the U.S. economic case against the Chinese front and center.
For the time being, Wall Street favors the Trump administration. Although some economists disapprove of his blatant anti-China and protectionist policies, the President’s outlook will prevail in the short term. On January 25, 2017, the Dow Jones Industrial Average surpassed the 20,000 mark – a sure indicator for Wall Street’s Trump endorsement.
We can only continue to stress the uncertainties associated with the current administration and with a bull market in equities. While you shouldn’t make a financial decision in panic, you should, by all means, hedge your paper assets with the purchase of physical gold.
Let the inverse correlation between stocks and gold work for you. You stand to lose less on an abrupt reversal of the stock market or a Trump knee-jerk reaction that backfired. Your gold hedge will allow you to sleep much better at night.
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