How Trump Can Win the Trade War
It isn’t by cutting rates. That would only give Beijing an economic crutch to support its champions and hurt U.S. companies.
A Big, Beautiful rate cut won’t help you, man.
Photographer: Ethan Miller/Getty Images North AmericaIf the trade war's objective is to even the playing field for American firms, President Donald Trump isn't going about it the right way. China’s easy access to U.S. dollars over the past decade has fueled asset bubbles, driven an overseas debt binge and laid the groundwork for its low-cost, export-driven economy. Only cutting off the supply of cheap money will reverse this.
So while Trump is pressuring Federal Reserve Chairman Jerome Powell to cut interest rates – questioning the central bank chief's patriotism and calling him "a bigger enemy than Xi Jinping" – the way to wring equitable behavior out of China is for the Fed to hold the line.