President Trump may not intend to launch the 2nd Cold War, but his tweets today laid out one path to get there.
Why it matters: The president is using Twitter to demand a conscious uncoupling of the world's two largest economies.
Trump's tweets, sent after China announced retaliatory tariffs on $75 billion in U.S. goods:
- "Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA."
- "I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE all deliveries of Fentanyl from China (or anywhere else!)"
Reality check: Presidents don't get to order companies to come home.
Between the lines: Earlier today, Fed Chair Jay Powell warned that "trade policy uncertainty" is a driving factor for the market's fears.
- Trump's response: "My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?"
Behind the scenes: Trump recently told advisers that he would be perfectly happy if the U.S. did no trade whatsoever with China, Axios' Jonathan Swan tells me.
- In late 2017, Trump first caught aides off guard when he floated the impossible idea of cutting off all trade with China.
What's next: Sources briefed on the president’s reaction this morning say they expect him to announce more tariffs imminently.
The bottom line: All of this has gone down during a strong economy. Imagine how bad it'd get were things to turn in the other direction.