Thucydides’s Trap

Yesterday, Trump took to Twitter and unexpectedly threatened to raise tariffs on Chinese goods this coming Friday. This caught most people by surprise given incessant commentary over the past several months about how good trade talks were going and how close both sides were to signing a monumental deal. Although Trump's tweet led to immediate turmoil in global financial markets, U.S. equities have gone up in a straight line since the market opened and are barely down as I write this. Investors appear to assume this is just theater meant to make the U.S.

If you receive your news via Donald Trump tweet, or courtesy of proclamations by Larry Kudlow, you'd be forgiven for eagerly anticipating a groundbreaking U.S.-China trade deal to be announced imminently, and thinking such a deal will save the global economy from rolling over into a serious downturn as well as pacify geopolitical tensions between the number one and number two economies in the world. However, if you expect these things, I don't think you're paying attention.