Nearly half of America's annual imports from China could soon come with a 25% tax, the end result of tariffs affecting everything from individual consumer buying decisions to long-term corporate investments.

• The latest: China has threatened to tax another $60 billion worth of U.S. imports, a proportionate response to a $200 billion threat from the U.S. on Wednesday. The list of threatened goods ranges from foodstuffs to machinery and auto parts.

Why it matters: President Trump, like his Chinese counterpart Xi Jinping, hopes to win at the bargaining table. But U.S. trade wars on three continents risk unleashing inflation that hits consumers, along with business uncertainty that could hamper corporate investment.

How it's playing:

• Europe: "[S]urveys in both the United States and Europe show that businesses are nervous about the fragile détente reached in late July... When managers are afraid, they may cancel or delay investments in new equipment or expansion..." [NYT]
• China: "The Chinese leadership... is counting on the Communist Party’s tight grip on the government, media and society, which allows Mr. Xi to impose his policies without public debate or second-guessing from rivals... Beijing officials indicate that China won’t be willing to commit to another round of negotiations with Washington unless the White House can decide on a point person to deal with China." [WSJ]
• Trump's White House: "[China's] economy’s weak, their currency is weak, people are leaving the country. Don’t underestimate President Trump’s determination to follow through," National Economic Council Director Larry Kudlow said today on Bloomberg TV.
• Trump's America: "Missouri-based Mid Continent Nail ... recently laid off 26 percent of its 500 workers because of a 70 percent drop in orders due to the steel tariffs. Chris Pratt, a general manager at Mid Continent, wrote in the Wall Street Journal that many colleagues still have faith in Trump 'but time is running out.'" [Reuters]

Be smart: Trump is gambling he can break someone who is an autocrat and doesn't have to worry about domestic politics. Not surprisingly, it's not working. 

Flashback: Hyperlocal headlines illustrate impact of Trump's trade war

Our deep dive: A new era of global trade wars

P.S. One surprise winner of the trade war is Hong Kong, which benefits from American exporters desperate to offload tariff-free fruit, the South China Morning Post reports.

"Russian soldiers during the Open Water contest between pontoon bridge units at the 2018 International Army Games on the Oka River."

1. The U.S. economy added 157,000 new jobs in July and the unemployment rate fell to 3.9%, but wage growth continued to lag behind inflation. Chart.
2. Las Vegas police still haven't discovered why Stephen Paddock — an "unremarkable man" who killed 58 people — decided to go on his rampage. More updates.
3. Eleven states have joined a lawsuit against the federal government over the distribution of blueprints for 3D-printed guns, bringing the total to 19. The list.
4. The SEC is dropping its two-year investigation into whether ExxonMobil misled investors on the risks greenhouse-gas regulations poses to the company. Go deeper.
5. California's fire tornado in July had winds as strong as an EF-3 tornado, according to the National Weather Service. Go deeper.

I think PMers will enjoy this ... "Copycats and Contrarians: Why We Follow Others ... and When We Don't," by Michelle Baddeley, an Australian researcher in behavioral economics (Yale):

• This is an academic yet breezy look at mob psychology, the wisdom of crowds, herding (human and animal) and mavericks.
• "History's most famous rebels have well understood their symbiotic relationship with the copycats following them."
• "In voters' adoration for their political leaders, ... [r]eliance on emotions is all but inevitable. Voters don't have time, and sometimes lack the expertise, to research and understand all the details of the [candidates'] policies ... Added to these constraints is the fact that political news has become so noisy and unreliable."

Happy weekend. Love any thoughts: Just reply to this email, or I'm [email protected].

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