Dalio: A U.S.-China trade war would be a tragedy
From Ray Dalio on LinkedIn:
The markets’ reactions to newly imposed tariffs and, more importantly, the possibility of a U.S.-China trade war convey appropriate tip-of-the-iceberg concerns of what a trade war would mean for the U.S., China, and world economies and markets. To me, these concerns are reminiscent of the markets’ first reactions to the possibility of a military war with North Korea—i.e., the seemingly aggressive posture of Donald Trump conjures up pictures of war that are very scary, so the markets react, but that doesn’t mean that such a war is likely (at least in the near term).
While I’m not a geopolitical analyst, here’s my thinking based on the time I’ve spent in both the U.S. and China. Take it with a grain of salt.
The Chinese way of negotiating is more through harmony than through confrontation, until they are pushed to have a confrontation, at which time they become fierce enemies. They are more long-term and strategic than Americans, who are more short-term and confrontational, so how they approach their conflicts is different. The Chinese approach to conflict is more like playing Go without direct attack and the American approach is more like playing chess with direct attack. The Chinese prefer to negotiate by finding those things that the people they are negotiating with really want and that the Chinese are comfortable giving up, in exchange for those people they are negotiating with doing the same. Because there are now many such things that can be exchanged to help both parties (e.g., opening the financial sector in China, Chinese investment in the U.S., agricultural product imports to China, etc.), there is plenty of room for there to be big win-wins…