It’s Tariffs at 20 Paces in Trump-Xi Trade War

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The leaders of the world's two biggest economies are waiting to see who blinks first while bracing for an all-out trade war.

President Donald Trump fired a shot at China's plans to dominate strategic technologies, proposing tariffs on 1,300 goods from semiconductors to flamethrowers. China hit back hard today, targeting politically sensitive goods like soybeans, automobiles and aircraft with retaliatory duties.

Worryingly, both Trump and Chinese President Xi Jinping may think they have a stronger hand.

Trump sees China's economy as fragile and is betting that Xi will force through reforms before risking instability, according to Scott Kennedy, a China scholar at the Washington-based Center for Strategic and International Studies. Xi, on the other hand, doesn't think Trump can endure much political pain or equity market losses, and will likely take a quick deal.

The two sides have left themselves a window to back down. Trump's tariffs have a 60-day public comment period before they take effect. China said its duties will be implemented at the same time, and urged dialogue to solve the problem.

Trump said last month trade wars are “easy to win.” He'll soon find out.

Global Headlines

Amazon bluster? | Judging from his tweets, Trump has the knives out for Amazon. But inside the White House, there's no active discussions about turning the power of the administration against the company, Jennifer Jacobs and Spencer Soper report. Attention has now turned to what may come from Trump's dinner last night with Safra Catz, the co-chief executive of Oracle Corp., one of Amazon's rivals for a Defense Department contract.

An emptying bench | Trump's shrinking legal team has exposed a gap in criminal law expertise that could leave the president vulnerable if he agrees to be interviewed by Special Counsel Robert Mueller in the Russian election meddling probe. It already has some advisers worried, given the risk of criminal charges if the voluble president is caught in a misstatement. Now, he lacks a seasoned criminal lawyer with experience guiding clients through high-pressure encounters.

Troika of Syria winners | The alliance of Russia, Turkey and Iran, now the dominant actors in Syria's war, is stepping up efforts to impose a peace. It may end up presiding over a partition. Henry Meyer, Ilya Arkhipov and Selcan Hacaoglu look at what's at stake as the three countries' leaders meet in Ankara today for their latest summit on Syria's future.

Nigerian violence | Islamist militant attacks, killings between cattle herders and crop farmers and unrest in the oil-rich Niger River delta have forced the army to deploy to keep the peace in Africa's most populous nation. With general elections less than a year away, the undermanned and underpaid police force is overwhelmed, prompting the government to act, in the words of a presidential spokesman, “to avoid the mess that destroyed other African countries like Somalia.”

Eastern reboot | Three decades after the fall of communism, central and eastern European countries are reaching the limits of an economic model based on cheap labor and foreign investment. Andra Timu and Milda Seputyte examine how rising wages and low unemployment have sparked a shift toward higher-value production.

What to watch today:

• The Organisation for the Prohibition of Chemical Weapons meets to discuss the nerve-agent poisoning of a former spy in the U.K. The Kremlin's demanding the British government apologize for blaming Moscow after the head of a British laboratory said it couldn't specifically identify Russia as the source of the poison.
• It's the final day for companies with 250 or more staff in the U.K. to reveal their gender pay gap. 
• Bahrain, the smallest energy producer in the Persian Gulf, will reveal details on the discovery of its biggest oil field since it started producing crude in 1932.
• Mexico's economy minister travels to Washington for meetings with the American trade representative as part of U.S. efforts to force a breakthrough in Nafta talks.

And finally... Bloomberg's annual Global Vice Index is out and shows that maintaining an addiction is cheapest in Luxembourg, where the cost comes in at less than 10 percent of the $2,071 average weekly wage. By contrast, Ukrainians must spend 13 times their weekly salary for the same fix, making it one of the costliest places for those making local wages. The gauge compares the share of income needed to maintain a broad weekly habit of cigarettes, alcohol, marijuana, amphetamines, cocaine and opioids across more than 100 countries.

To contact the author of this story: Daniel Ten Kate in Hong Kong at dtenkate@bloomberg.net.

To contact the editor responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Caroline Alexander

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