CNBC’s “Mad Money” host Jim Cramer said this week that investors are not prepared for the possibility that U.S. President Donald Trump could very well walk away from negotiations to secure at least Phase 1 of a new trade deal with China.
Cramer said the president is looking for signs that the Chinese actually want to make a deal but they just keep provoking him, even humiliating him, the latest embarrassment being that Beijing just banned its state offices from having foreign hardware, including personal computers (PCs) within the next three years.
Such an order will hurt U.S. companies like Microsoft, Dell and HP.
“I think people continue to believe that there’s going to be a deal because they think it’s rational. ‘Why not do a deal? It’s good for both sides,’” Cramer said on CNBC’s “Squawk on the Street” program. “I think if the president weren’t continually prodded by the Chinese, humiliated some … by the Chinese — humiliated, yeah. The Mnuchin people keep saying, ‘They’re totally on board, the Chinese people, they absolutely want to do a deal.’ And then president wakes up and sees that our PCs are going to be outlawed when he would expect that the PCs are going to be accelerated, more PCs.
“He wants some sign that the Chinese want to do a deal.”
On the U.S. side, the Trump administration has blacklisted Chinese telecom giant Huawei from purchasing U.S. tech, so China’s move to ban U.S. PCs is retaliatory.
“Why should there be a deal?” Cramer, a supporter of the president’s hard-line tactics, said. “It’s provocation.”
The next round of 15% tariffs on products including smart phones, laptops, gaming consoles and more are scheduled to go into effect on Dec. 15 and Cramer said “it’s fish or cut bait time, and I think that the cut bait is, ‘Thanks for nothing, China.'”
“I think the president is increasingly saying, ‘If they’re going to continue in my face to not want to do a deal, I’m happy to walk away,’” Cramer explained. “So I think that’s the tenor of things right now.”
“The president just felt that the numbers are really unbelievable. He put together a montage of people from all different networks saying that the numbers are good, not just … Fox (News). I think that he’s basically saying, ‘Look, maybe the American people are really ready to take them on on.’ I think the president was also very upset about the Chinese adopting malicious cybersecurity rules that are very bad for the United States.
“I think he just feels like this is the time to walk away. The American consumer is strong, the enterprise doesn’t seem that weak.”
Meanwhile, top U.S. economic advisers like Larry Kudlow are saying the two sides are close to a deal.
The seemingly never-ending trade spat continues. Stay tuned …
Editor’s note: As the saying goes: No one really wins a trade war. With that said, do you agree that we, the American people, are ready to take on China? Why or why not? Share your thoughts below.