So, the Dow was down over 3% and the Federal Reserve has no choice but to tighten rates given the incredibly robust economy. Should we panic?

Rising interest rates in a growing economy with relatively benign inflation has not generally been a harbinger of doom, but a flattening yield curve (interest rates plotted against the length of maturities: usually 2 to 10-year maturities are the ones markets focus most on) does indicate a possibility of slower growth or even recession in the future.

But there’s another sliding market that’s perhaps more important right now, and for the future of the global economy: the slide in the Chinese yuan, the unit of account of the renminbi, China’s currency. For some reason the Chinese have to use two terms where most countries use one. America’s currency is the dollar and the unit of account is … you guessed it! The dollar!

Forecasters have been predicting the collapse of the Chinese bubble for years now, while the defenders of China’s economy suggest – reading from the official party script – that it’s all a case of careful fine-tuning of policies. Adjusting a little here. Tweaking a little there. Never mind mounting real estate debts. Never mind suspicious balance sheets at many banks. Never mind the shadow debts tucked away underneath all that new construction.

But do mind Trump and his trade conflicts.

Worries about U.S. tariffs hurting China’s export economy are truly coming home to roost, finally causing nervousness on the part of the main people whose opinion really does matter: the Chinese leadership. So, the question becomes: will China back down now or will it stick to its 30-year plan to World Domination, and ignore the pesky irritations of this surely one-term president?

Uh, maybe not?

These tariffs will cause damage, how much remains to be seen, but the damage will be and already is real. The question is, can they convince the Chinese leadership through their blunt force to start minimally respecting things like property rights and basic freedoms of their own people?

We don’t know at this point, but we will find out over the next few years. Trump has brought a sledgehammer where the experts have said he should use a finely-tuned laser. But there’s been a great deal of fine-tuning and little has changed in China’s ruthless mercantilism over the past two decades during which it has reaped enormous benefits from being a member of the WTO. Its behavior suggests it has not really deserved this privilege, but most countries look the other way and are glad to pick up what they can from leftovers of the banquets at the Great Hall in Beijing, speaking I hope to God, metaphorically. I don’t think the Prime Minister of Canada or the German Chancellor, for example, have actually gone scurrying under the tablecloth in Beijing to grab some crumbs, but you get the point.

Will Trump produce a noticeable change in China’s behavior? Or will he cause a real trade war? Or will he perhaps end up doing a bit of both, thereby giving his detractors just enough to holler about and give his defenders enough to praise?

And give his Chinese counterparts enough to worry about?