- Billionaire investor Stanley Druckenmiller warns that the US is on course to lose to China on trade and in the technological cold war.
- He says the Trump administration’s approaches to tariffs and big-tech regulation are giving China the upper hand.
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President Donald Trump once declared, via his Twitter account, that trade wars are “good, and easy to win.”
That was more than a year ago. Since then, he has escalated the trade dispute with China, threatened a new one with Mexico, and heightened the risk of an economic recession.
So maybe trade wars are neither good nor easy to win. Stanley Druckenmiller, the billionaire investor and founder of Duquesne Capital, is among those who disagree with Trump.
“I will go to my grave — you’re not going to tell me that protectionism is as good as free trade,” he said at a recent event hosted by the Economic Club of New York. “I just don’t believe it.”
Be it a financial or technological conflict between the world’s two largest economies, Druckenmiller sees no path to victory for the US it continues on its current trajectory.
He realized the losing strategy after observing how Trump was waging his trade war. Trump wants to run on tariffs in 2020 and thinks it’s a winning formula for the swing states he needs to secure a second term, Druckenmiller said. In turn, this means he’s unlikely to budge on giving China’s Xi Jinping a real deal.
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Another event that cemented Druckenmiller’s view of US-China relations was Trump’s weekend tweet threatening to slap tariffs on Mexico. While there’s a real immigration issue, Mexico has cooperated with the Trump administration’s reconstitution of the North America Free Trade Agreement, Druckenmiller said.
“To me, Xi Jinping and the hardliners just got a very, very big gift from Donald Trump doing what he did to Mexico,” he said.
And that’s not all. Trump’s approach to the so-called tech cold war between both countries will also hand China a win in the long run, according to Druckenmiller.
His issue lies with how both countries are regulating their technology giants.
“The minute this trade stuff started happening last fall, they started easing up on their private sector, particularly Tencent and Alibaba,” Druckenmiller said.
He added: “They’re huge supporters of Huawei. They’re oiling their whole tech machine. What are we doing? We’re saving steel, coal, aluminum — they’re really the future here guys. And what are we doing with our leading tech companies? We’re throwing sand in the gears and making their lives miserable.”
He decried critics of American tech giants like Alphabet who say that they’re anti-competitive and harming consumers. Alphabet has already been probed and fined by European regulators, but the Department of Justice is reportedly gearing up for its own antitrust investigations.
“I am not a nationalist,” Druckenmiller said. “But if we’re going to be in some kind of conflict, it’s going to be fought among the big tech companies. We’re going to get rolled.”
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