- Former Goldman Sachs CEO Lloyd Blankfein thinks the trade war could be good for America.
- He expects tariffs to hurt China more than the US because of the former’s greater reliance on trade.
- Blankfein compared the trade war to a labour strike, where both sides suffer but the winner demonstrates “strength” and “resolve,” and forces a compromise.
- Americans will pay “a bit more” for goods but “assert pressure to level the playing field.”
Lloyd Blankfein thinks the trade war could be good for America.
The former Goldman Sachs CEO argued tariffs hurt China more than the US in a tweet on Tuesday. He compared the face-off between the world’s two largest economies to a labour strike, where management and workers both suffer but one side is cowed by the other’s conviction and ultimately compromises.
“Tariffs might be an effective negotiating tool,” Blankfein wrote. “Saying it hurts us misses the point.”
The former banking executive added that China suffers more than the US because it relies more on trade. He argued the dispute could demonstrate America’s “strength” and “resolve” and force China to compromise.
President Donald Trump accused China of sabotaging a prospective trade deal and hiked tariffs to 25% from 10% on $US200 billion of Chinese goods last week. China retaliated with duties of up to 25% on $US60 billion worth of US goods, set to take effect on June 1.
In a follow-up tweet, Blankfein suggested both sides could pay for the tariffs. Americans might shift their purchases away from Chinese companies and pay “a bit more,” but the loss of sales for Chinese companies would “assert pressure to level the playing field.”
Researchers predict the latest US tariff hike could mean the average American household ends up paying $US800 more annually for clothing, electronics, toys, and other consumer goods. Investors have also sold off fashion stocks such as Victoria’s Secret-owner L Brands and Tiffany & Co. in anticipation of higher import and export costs and weaker Chinese demand.
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