President Donald Trump will continue to blame China for the COVID-19 pandemic, as well as the stock market volatility and rising unemployment that have resulted from it, and that may only hurt the ongoing trade war between China and the U.S., according to Jeremy Siegel, professor of finance at Wharton and WisdomTree senior investment strategy advisor.
“Trump is going to be campaigning against China for his presidential reelection campaign,” Siegel said Monday during his weekly conference call on the state of the markets.
“There will be tariff talk,” he predicted, adding: “Tariff talk at this time is not good. No tariffs are really good at this point.”
However, he added: “My feeling is [it’s] going to be much more talk than it’s going to be action because he also knows the stock market doesn’t like it. But he’s got to talk tough for his base.”
It is “absolutely true that [China] totally bungled the beginning” of the coronavirus outbreak, and “had they not, we probably would not have this pandemic at all,” Siegel said. But “I don’t think it was intentional” on the part of the Chinese.
Before the COVID-19 pandemic started, many analysts projected that global economic growth this year would be tied to comprehensive trade deals, especially between China and the U.S. Trump signed a phase one U.S.-China trade agreement at the White House in January that was widely seen as a positive step toward ending the trade war between the countries, but most tariffs remained in place with it.
More Positive Signs
Siegel also pointed on the call Monday to positive signs on the COVID-19 battlefront that included an “explosion of testing,” as well as reports of promising developments with drugs that treat COVID-19 and vaccine development.
Although we are not yet seeing huge increases in COVID-19 cases in states that have opened up, he conceded it is still “very early in this opening-up stage.”
At least some experts believe there is probably a minimum of six months of immunity for those with antibodies, he said. A growing number of Americans are finding out whether or not they have antibodies through testing.
However, there is still “a lot of unknown — we need more data” on issues including whether warmer weather in recent days in the Northeast will lead to further declines in COVID-19 cases, he noted.
‘Consequences Down the Road’
Pointing to the U.S. Treasury Department’s plan to borrow $3 trillion in the second quarter this year to pay for the government’s pandemic initiatives, Siegel said: “That’s 15% of the GDP. That’s more than what was borrowed entirely for World War II. That is six times the previous record … You can’t tell me that that is not going to have consequences down the road.”