President Trump Approaches His ‘Reagan Moment
The chief economic adviser to Allianz SE also set some other odds in a recent TV interview. El-Erian puts a 15% chance on a “Reagan moment” in trade, but 25% odds that President Trump’s approach may result in a global trade war.
The idea of a possible “Reagan moment” compares President Trump’s stand, particularly towards China trade, to President Ronald Reagan’s tough approach with Russia during the Cold War.
Reagan also engaged in aggressive trade policies, including quotas on Japaneses cars, CNBC explained.
But the former CEO of investment chief at Pimco said Monday the real question for investors is “how much damage would we incur in the process of winning this?”
“I’ve said from day one, it’s just a matter of time until other countries realize that their best approach is to collaborate with the US and fix things that are broken,” Mr. El-Erian said on TV
Meanwhile, recent US-China trade talks were heavy on details but short on progress as US negotiators outlined cases of American firms harmed by Chinese practices and China argued it was meeting its WTO obligations, people familiar with contents of the discussions said.
The 2 days of talks in Washington led by mid-level officials did little to resolve a worsening trade spat between the world’s two biggest economies and ended on Thursday without a joint statement.
Washington separately held hearings during the week on another round of proposed tariffs on $200-B worth of Chinese imports that appear increasingly likely to take effect in late September or early October.
And while factions on the US side have given conflicting signals on how hard to press Beijing during the trade dispute, officials from the Treasury Department, which led the talks, and the US Trade Representative, which has taken a harder line, were aligned in their messaging, the people said.
The talks took place as the 2 sides followed through on threatened tit-for-tat tariffs on $16-B worth of the other’s goods. Beijing has filed a complaint with the World Trade Organization (WTO) about the US duties.
During the talks, Chinese negotiators repeatedly invoked what they said was Beijing’s compliance with WTO rules, an argument that does not impress the US side.