Here’s Help Decoding Trump’s Trade Brain, Bluffs and Bluster

(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. 

Financial markets whipsawed yet again by Donald Trump's messaging on trade this week might want to recall one of the U.S. president's favorite postures in the heat of negotiations -- patience.

“The worst thing you can possibly do in a deal is seem desperate to make it,” he tweeted in November 2013, citing his book “The Art of the Deal.”

Tuesday's remarks from Trump that he likes the idea of waiting until after the November 2020 election to sign a deal with China sent stocks tumbling on concern that the trade war will drag on past a Dec. 15 deadline for another U.S. tariff hike. One likely message intended for Beijing: Go ahead, keep stalling until I win another populist mandate to keep fighting you with duties.

A day later, Trump's dare appears more positioning than plodding as both sides edge closer to a phase-one pact that still might fall apart. Bloomberg on Wednesday reported that despite Trump's comments and the tougher rhetoric between Beijing and Washington, talks on the first stage continue and the U.S. side remains hopeful on a breakthrough in the next week or two. Stocks rebounded.

Here are some other examples of Trump's posturing as he tries to gain something else he likes in trade negotiations -- leverage:

Partial China Deal

On Sept. 20, Trump said in a news conference in Washington that “I am not looking for a partial deal. I am looking for a complete deal” with China on trade. The comments sent major U.S. stock indexes falling. Three weeks later, he announced that the two sides had reached a “substantial phase-one deal” that's “subject to getting it written” -- remarks that helped propel a rally in equities.

European Car Tariffs

On Feb. 20, Trump said he would impose tariffs on cars from the European Union if U.S. talks with the bloc failed to yield a new trade deal. In May, with talks still not under way, he gave himself until mid-November to decide, even as the EU threatened to retaliate with tariffs on $39 billion of American goods. On Nov. 13, with the deadline looming, Trump said he will decide fairly soon whether to put tariffs on European car imports. Commerce Secretary Wilbur Ross has said recently that the auto tariffs may not be necessary.

Exiting Nafta

The first major trade deal Trump tackled was a rewrite of Nafta with a new name: the U.S.-Mexico-Canada Agreement. During the trilateral talks, he often wielded the threat to walk away and, as he tweeted in September 2018, “simply terminate NAFTA entirely.” The threat was never carried out, however, and the three neighbors signed an accord in November 2018. The U.S. Congress is currently debating whether to ratify it.

WTO Withdrawal

In August 2018, the U.S. president said in an interview with Bloomberg that if the World Trade Organization doesn't “shape up, I would withdraw” from the Geneva-based institution formed in 1994 to enforce the rules of global commerce. (Never mind that it would take an act of Congress for the U.S. to leave the WTO.) The U.S. today remains one of its 164 members, and perhaps withdrawal won't be necessary. That's because the U.S. has been blocking the appointment of judges to the WTO's appeals body, slowly asphyxiating one of its main functions: providing a forum to resolve disputes.

To contact the reporter on this story: Brendan Murray in London at brmurray@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Brendan Murray, Ana Monteiro

©2019 Bloomberg L.P.