Sort & Cull

Regardless whether you believe Donald Trump should be the next winner of the Nobel Peace Prize or prepared to vacate the White House soon after Robert Mueller issues his final report, I think friend and foe alike can agree that this is one chief executive that likes nothing better than to double down.

We saw this amazing, tactic swagger throughout the election season of 2016, and he has used it to redefine presidential deportment and power ever since the oath to the highest office in the land was administered on Jan. 20, 2017.

Whether responding to a critical accusation on Tweeter, radically correcting the implications of "fake news," or countering perceived threats by virtually any ally or adversary who dares to pontificate upon the global stage, our commander in chief seldom seems reluctant to double down.

The latest example of this unique style of leadership (effectively bold or destructively reckless, history must judge) was evident this week when the president proposed expanding our trade war with China, taxing an additional $200 billion of imports by 25%. When he first proposed this longer list of Chinese imports earlier this summer, the tariff was to set at only 10%.

So what's caused President Trump to suddenly double down on the tariffs? I've heard the dreaded press corps speculate in two different directions: 1) The president is simply mad at China for having the audacity to impose retaliatory tariffs against the U.S.; 2) Discouraged by his "short and easy-to-win" trade war model, Mr. Trump hopes his old standby from New York real estate and Atlantic City casinos will help turn up the heat.

Personally, I'm not smart enough to know when to double down or just run away like hell. Nor do I have enough letters behind my name to evaluate the critical tipping point in a global trade war. While either roaring flames or dying embers in the aggregate fire of world economics will ultimately put this thing to bed, all I watch are a few small bonfires like pork, beef and beans.

Having said that, there were a few, small news stories on the wire this week capable of making a minor difference when it comes to the overall effectiveness of doubling down.

First of all, China reported its first outbreak of the deadly African swine fever (ASF) on Friday, as authorities in Liaoning Province in the country's northeast culled almost 1,000 hogs and rushed to control the highly contagious disease. ASF has been known to devastate virtually overnight. Here's a wildcard that could conceivably cripple China's trade war leverage.

In another article, the USMEF reminded beef exporting bulls how tough it was set to be in recovering Chinese demand even if the trade war had died on the way to the front. The beef trade with China reopened after 14 years of closure tied to BSE concerns.

The escalating trade war will make it even more difficult for U.S. beef producers to sell to China, the world's second-largest beef importer. China raised tariffs on U.S. beef from 12% to 37% earlier in July as part of its first wave of retaliatory duties. The additional 25% tariff would place U.S. exporters at a disadvantage, compared to the 7.2% duty that Australian beef imports are subject to under their free-trade agreement with China.

Talk about a short honeymoon.

Finally, I read an interesting article this week in the South China Morning Post suggesting that Chinese pork producers could get by rather easily in the short term without importing a single pod of U.S. bean. Ma Wenfeng, an analyst from Beijing Orient Agribusiness Consultant, said China had been importing far more soybeans than it really needed. The "surplus" 32 million metric tons -- which Ma defined as beans that were unnecessarily consumed -- was close to the amount of imports from the U.S. In part, Ma contended that pig farmers could rely more heavily upon corn meal, a commodity well stocked in state reserves.

Lastly, the Chinese analysts argued that Brazil is replacing the U.S. as the top soybean supplier for China, supplemented both by Canada and Russia. "We can ensure normal consumption of soybeans even if we completely stop importing soybeans from the U.S. amid the trade dispute," Ma said.

While this motley collection of trade stories certainly don't chug along on the same tracks, I thought the diversity of their possible implications may somehow help the assessment of double-down wisdom.

I'm willing to concede that President Trump has probably enjoyed some success with his double-down strategy (albeit surely on smaller stages). Yet let's hope Secretary Mike Pompeo and Trade Representative Robert Lighthizer can hold his ear long enough to remind him that the resolution of most international conflicts require a good deal of face-saving for both sides.

Prolonged double-downing can make difficult but necessary face-saving all the more elusive.

For more of John's commentary, visit http://feelofthemarket.com/…

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