Last May, and again last July, the Spirited Reasoner warned against the approach President Trump has been taking to (supposedly) punish China. Readers will recall that his strategy works something like this:

• He threatens a tariff against China, then

• Watches the U. S. Stock Market take a nosedive, then

• Backs off the tariff to make the markets rise again, then

• Waits a few months to play the same “tough guy” game again, hoping everybody forgot.

Only now, the Chinese government has President Trump’s game well in hand.

As I write these words, on September 5, 2019, the Stock Market is soaring. All because China has announced that it is willing to talk about tariffs.

Not that any agreement has been reached, mind you. It seems that all China needs to do is signal the merest willingness to talk, and that signal alone will send the New York Stock Exchange into the stratosphere.

In other words, China now realizes that it can control the ups and downs of U. S. financial markets by announcing, whenever it pleases, that it either does or doesn’t wish to cooperate with the United States when it comes to trade talks.

If I were a member of the ruling class in China, and once I learned the inside scoop about when my government was planning to make a “trade talks” announcement, I would buy shares of an index fund that held shares of nothing but stocks in American companies. Then, when the announcement was made and the market shot to new heights, I would sell my shares for a tidy profit.

Then I would wait until my country (China) cut off negotiations, sending share prices tumbling again. I would then scoop up the cheaply priced shares again, knowing I would soon be able to sell them. At some point, I would know that the prices of my stocks would rise steeply when my government decides to announce, as I know it will at some point, “Okay, we’re willing to talk after all.”

Of course, leaders in the United States who are closely connected to trade talks—i. e., President Trump and his friends—might be playing the same game, all at the expense of innocent stockholders.But we know our President would never engage in activities designed solely to line his own pockets at the expense of others. We can be certain he’s not selling us out because he’s shown us his tax returns, right?

Oh dear. The Spirited Reasoner might be wrong about that last part …