10 Leaders The EconomistAugust 10th 2019
1T
he twomass shootings within 24 hours of each other last
weekend, one in El Paso, Texas, the other in Dayton, Ohio,
were horrifying. Yet at the same time they were not surpris-
ing—at least in a purely statistical sense. So far this year America
has averaged one shooting in which four or more people are
killed or injured every single day. The death toll at the El Paso
Walmart was 22. And that awful number made it only the fifth-
deadliest shooting this decade. The ten people killed in Dayton
put the murder spree there down at number 11 on the same list.
When police officers are trying to solve a murder they look at
motive and opportunity. That framework is useful for thinkingabout mass murders, too. The shooter in Dayton left no explana-
tion for his actions. His social-media accounts show he was a mi-
sogynist with an interest in leftish causes. The El Paso killer
posted a manifesto filled with racist anxiety about the replace-
ment of whites by Hispanics, as well as language that could have
been drawn from a Trump rally (see United States section).
After the killings, people have blamed any number of
causes—from mental illness and video games to the internet and
the social alienation of young men. Yet cause and effect are hard
to pin down, as shown by the row about Donald Trump’s culpa-
bility for what happened in El Paso. His role matters not just be-It’s the guns
Other rich countries do not have frequent mass shootings. There is a simple reason for thatMass shootings in AmericaS
ince thetrade war began in 2018 the damage done to the glo-
bal economy has been surprisingly slight. America has grown
healthily and the rest of the world has muddled along. But this
week the picture darkened as the confrontation between Ameri-
ca and China escalated, with more tariffs threatened and a bitter
row erupting over China’s exchange rate. Investors fear the dis-
pute will trigger a recession, and there are ominous signs in the
markets—share prices fell and government-bond yields sank to
near-record lows. To avoid a downturn, both sides need to com-
promise. But for that to happen President Donald Trump and his
advisers must rethink their strategy. If the realisation has not
dawned yet, it soon should: America cannot have a cheap curren-
cy, a trade conflict and a thriving economy.
The latest spike in tensions began on August
1st, when the White House threatened to impose
a further round of duties on $300bn of Chinese
exports by the start of September. China re-
sponded four days later by telling its state-run
companies to stop buying American agricultur-
al goods. On the same day it let its heavily man-
aged currency pass through a rate of seven
against the dollar, a threshold which may seem
arbitrary but is symbolically important (see Buttonwood).
That lit a fuse beneath the Oval Office. Mr Trump has long
claimed that other countries, including China, keep their cur-
rencies artificially cheap to boost their exports, hurting America.
He has been griping about the strong dollar for months. In June
he accused Mario Draghi, the head of the European Central Bank,
of unfairly weakening the euro by hinting at rate cuts. Hours
after the yuan dropped, America’s Treasury designated China a
“currency manipulator” and promised to eliminate its “unfair
competitive advantage”. As the hostilities rose, markets
swooned, with ten-year bond yields in America reaching 1.71%,
as investors judged that the Federal Reserve will slash interest
rates to try to keep the expansion alive (see Finance section).There is no denying that China has manipulated its exchange
rate in the past. But today a different dynamic is playing out
around the world. Mr Trump wants a booming economy, protect-
ed by tariffs and boosted by a cheap dollar, and when he doesn’t
get them he lashes out. But economic reality makes these three
objectives hard to reconcile. Tariffs hurt foreign exporters and
dampen growth beyond America’s borders; weaker growth in
turn leads to weaker currencies, as business becomes cautious
and central banks ease policy in response. The effect is particu-
larly pronounced when America is growing faster than other rich
countries, as it has recently. The dollar’s enduring strength is a
result, in part, of Mr Trump’s policies, not of a global conspiracy.
Unless this fact sinks in soon, real harm will be done to the
global economy. Faced with the uncertainty
created by a vicious superpower brawl, firms in
America and elsewhere are cutting investment,
hurting growth further. Lower interest rates are
making Europe’s rickety banks even more frag-
ile. China could face a destabilising flood of
money trying to leave its borders, as happened
in 2015. And further escalation is possible as
both sides reach for economic weapons that
were considered unthinkable a few years ago. America could in-
tervene to weaken the dollar, undermining its reputation for un-
fettered capital markets. China or America could impose sanc-
tions on more of each other’s multinational firms, in the same
way that America has blacklisted Huawei, or suspend the li-
cences of banks that operate in both countries, causing havoc.
As it pursues an ever more reckless trade confrontation, the
White House may imagine that the Federal Reserve can ride to
the rescue by cutting rates again. But that misunderstands the
depth of unease now felt in factories, boardrooms and trading
floors around the world. In September talks between America
and China are set to resume. It is time for a settlement. The world
economy cannot stand much more of this. 7Dangerous miscalculations
Chinese yuan per $
Inverted scale2008 10 12 14 16 197.7.6.6.America cannot have a strong economy, a trade war and a weak dollar all at the same timeUS-China trade