Earlier on Sunday, we noted that according to plans that aren’t yet plans, Steve Mnuchin might consider taking some time away from signing dollar bills   to take a trip to China, where he would ostensibly try to convince Beijing that negotiating with Trump and Peter Navarro isn’t a lost cause.

Of course it is a lost cause because if Trump is serious about adopting the Navarro doctrine, well then he’s even crazier than everyone thought and if this is all just a political gambit aimed at bolstering the GOP ahead of the midterms, then it’s not clear why Beijing shouldn’t just keep threatening to retaliate in ways that hurt voters in key states and then just sit back and wait on the elections to be over.

The problem here for markets (and for the world more generally)  if China loses patience with this and does something that destabilizes global equities, it could ultimately tighten financial conditions and choke off growth – and that Trump is right on the verge of stepping over the line.

And as anyone who knows Trump will tell you, he’s a “habitual line stepper”:

In case you aren’t aware, the “line” Trump is about to cross involves releasing a list of products tied to the additional $100 billion in tariffs he instructed the USTR to consider earlier this month after China’s initial retaliation to the original list published in conjunction with the 301 probe.

As a reminder, Trump published the original list on the evening of April 3 and just hours later, Beijing struck back, announcing 25% reciprocal tariffs on 106 U.S. products, including soybeans, cars, planes and chemicals.

The soybeans were a real blow for Trump as it raised the specter that Beijing might try and undercut the President’s support in the agricultural community and so, unable to contain himself even for 24 hours, Trump responded by suggesting another $100 billion in tariffs which, when combined with the initial $50 billion and the steel and aluminum levies, took the total proposed measures to a number larger than the entire amount of goods the U.S. exports to China:

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