For months, I have listened to Wall Street analysts and the business media claim that the new U.S.-China trade war is a nonevent. They claim that Trump is not serious about seeing through on his threatened tariffs on China. They also claim that China is just posturing in its retaliation.

The expectation is that once the threats and posturing are over, China and the U.S. will work out their differences in a moderate way and get back to the business of globalized supply chains. I’ve said all along that these mainstream analysts had it wrong. The trade war is real, it is escalating quickly and neither side seems willing to back down or de-escalate.

This article supports my position and adds fuel to the fire. China’s trade surplus with the U.S. hit a new record in August 2018 despite tariffs that Trump has imposed since last January.

Trump has never focused on big-picture concepts involving free trade. Instead, he focuses on numbers such as the size of the Chinese trade surplus with the U.S., currently about $300 billion per year. Trump wants that number much lower, and that is that.

This new report moves things in the wrong direction for Trump. It’s one more reason why this trade war will intensify and get worse despite the happy talk on Wall Street.

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