US not aiming to start a trade war with China: analyst
Capital Link International CEO Brett McGonegal says US President Donald Trump's big challenge is to follow up his political talk with strong action
Speculation about the United States imposing trade sanctions against China – or getting into a trade war – is largely talk, according to Brett McGonegal, CEO of Capital Link International.
Speaking on Bloomberg Television, McGonegal said: “Look, I think this is just another game. The administration in the US right now is taking things, obviously, from a much different angle to the previous administration.
“I don’t read much into this. I think a lot of this is really just talk, that [the US President Donald] Trump is playing to his power base in the US. People want to hear this. It gives positive sentiment to the whole play, the momentum he’s got right now. At the end of the day, I really just think it’s words.
“I think the real issue is that this administration has been long on talk and short on action,” he added.
“It is a criticism but I think the reason I bring it up is [people want to know] ‘What is the follow-through?’ You got the big headline – [now] is there a follow-through? I think that that’s the real challenge. But I don’t think that … we start a trade war.”
One positive element from Trump’s focus on the trade imbalance with China and other nations, he said, was the long argument on whether Beijing had been manipulating its currency “is now completely off the table. There is no way that the US can go back to that commentary.
“So, [the US Treasury Secretary Steven] Mnuchin is kind of in the middle of the political game that is going on and the brass tacks of what they need to do. This is a stimulus for the economy on the back of the tax cuts. Now you’ve got US exports – you’re gonna have some strong numbers. But like I said, I don’t think this thing plays out much deeper than that,” he added.
As for Trump’s Davos photo-call, McGonegal – a principal shareholder in Asia Times – was unsure what the US president’s approach would be to an audience of business elites.
“I don’t know what he’s gonna say. What he should say is, ‘the US is open for business’. That is not a bad slogan. However, the actions [of his administration] have not necessarily suggested that,” he said.
“I think he needs to speak to the audience there – it’s not like his US [base]. He’s speaking to the globe, he’s speaking to the European community [and] he’s speaking to people who want to do business. It’s one thing one day, another thing another day. There needs to be consistency to his message.”