DealBook Briefing: G.M.’s Cuts Spell Trouble for the Economy

If President Trump sought to end debate over America’s ties to Saudi Arabia with his pledge of support, he fell short, Andrew writes in his latest column. Instead, the move could inspire Congress to introduce new sanctions:

Mr. Trump may think he has gained the loyalty of the crown prince by standing by him, but if Congress moves to enact sanctions, the economic fallout could be serious for the kingdom, which the president has been encouraging to hold down oil prices.

Between the economic pressures that Saudi Arabia is increasingly facing — the price of oil is hovering around $50 a barrel when the kingdom needs it to sell for $70 to maintain its budget — and the executives who are rightly skittish about investing there, Mr. Trump may have pushed Congress toward taking actions that create more problems.

More Saudi news: Here’s a breakdown of Mr. Trump’s exaggerations on the economic benefits of the Saudi relationship. Sanctions on arms sales to the country might hurt defense contractors only slightly. And rich Saudis started pulling money from the kingdom long before the Jamal Khashoggi killing.

In an interview with the WSJ, President Trump said that it was “highly unlikely” that he would delay or suspend his plan to boost his tariffs on $200 billion worth of Chinese goods, currently 10 percent, to 25 percent next year.

His timing is inflammatory. Mr. Trump is scheduled to sit down with President Xi Jinping of China at the Group of 20 meeting later this week, with trade top of the agenda. Officials from both sides have been speaking for weeks, with China also making a public push to look open for international business.

Mr. Trump also said that if he couldn’t reach a trade deal, he would impose tariffs of either 10 percent or 25 percent on the rest of the goods America imports from China, another $267 billion worth. (American consumers could stand a 10 percent price hike on products like iPhones “very easily,” he declared.)

In the past, Mr. Trump has used threats as a negotiating tool. We will have to wait until the G-20 meeting to find out whether he was doing it again, or simply preparing the markets for bad news.