Goldman Sachs chief executive sees US avoiding ‘suicide pact’ on trade feud with China

Lloyd Blankfein suggests that the Trump administration’s threat of more punitive tariffs is merely ‘part of a negotiating pattern’

PUBLISHED : Wednesday, 20 June, 2018, 3:55am
UPDATED : Wednesday, 20 June, 2018, 6:13am

The Trump administration’s tariff threats against China make sense as a bargaining strategy and probably will not result in a devastating trade war, Goldman Sachs chairman and CEO Lloyd Blankfein said on Tuesday.

“That’s what you’d do if it was a negotiating position and you wanted to remind your negotiating counterparty of how much firepower you have,” Blankfein said in an interview at the Economic Club of New York. “I don’t think we’re in a suicide pact on this, so I suspect we’re not going to cause the economies to collapse.”

A trade battle is brewing between the world’s two biggest economies as China vows to retaliate against new tariffs planned by US President Donald Trump.

While the US$50 billion in tariffs already announced were mainly on industrial goods, Trump is now targeting US$200 billion in additional Chinese imports, a move that could push up prices for US shoppers on items like toys, tools and T-shirts.

“I do think – as some people have commented – that this is part of a negotiating pattern, that would be my best take,” Blankfein said of Trump’s threats.

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He also touched on the immigration debate in the US, where Trump’s “zero tolerance” policy separating children from parents crossing the border illegally has sparked protests and calls for a legislative fix.

The detentions have created a political crisis for Republican lawmakers trying to hold control of Congress in elections less than five months away.

“Watching now is heart-rending and I wouldn’t be on that side, but thank God I’m not there – it’s never right against wrong, good against evil,” said Blankfein, who noted that immigration debates have roiled Europe. “Now what do you want to do? Both sides are right.”

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Concerning cryptocurrencies, Blankfein reiterated that Goldman Sachs did not own Bitcoin. He had previously said he didn’t consider a digital currency that fluctuates wildly to be a store of value.

The price of Bitcoin, the most ubiquitous of the digital currencies, has lost half its value this year.