…and the Hang Seng Index falls 1,000 points.

People monitoring the US-China trade conflict mostly assume that Trump will ultimately cave in to his ‘good friend’ Xi Jinping. The US President’s grasp of trade economics is child-like. He is besotted by whatever will push up the stock market. The prospect of 12 hours’ narcissistic gratification from ‘winning’ an ‘agreement’ will overpower any grander strategic aim. Obviously, he will fold.

And now, at the last minute, he counters Beijing’s playbook foot-dragging with higher tariffs. He imagines that these represent a transfer of money from China Inc to the US government (‘winning’), which we all know is too simplistic.

But we also sense that China has more to lose from a war of attrition. China is surely more vulnerable to a serious decline in foreign-exchange earnings than the US is to higher-priced tractors.

Beijing is under all sorts of pressures, from maintaining a property bubble to keeping capital from fleeing to never admitting mistakes or showing weakness. One exquisite little conundrum: can they slap extra tariffs on US soybeans when the yuan is weakening and the domestic price of pork is already skyrocketing?

Maybe Trump is accidentally being clever. Maybe the motley selection of White House advisors (Panda-huggers, mouth-frothing neo-cons, smokestack-industry nostalgists, maybe someone who has a clue) are, when combined, accidentally producing a hard-headed approach. It beggars belief that there is a rational intelligence at work.

Will this last? Under the Communist Party, China is and will remain a state-managed economy that will never subject itself to international rules. The US and the rest must take it or leave it. (Will the last foreign company to leave China, please turn off the lights?) That’s the long-term picture.

But in the short-term, the Great Narcissist in the White House surely needs to declare his personal glorious victory, keep farmers and miners cheering him, and create a quick stock-market bounce. Right? If so, this is your buying opportunity.

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