Top news for this week: 1. Trump threatens BRICS nations with 100 percent tariff. 2. China strongly condemns U.S. arranging for Lai Ching-te's "stopover." 3. President Biden pardons his son Hunter Biden. And more...
Perhaps not exactly relevant to todays' post, but I thought I'd share it anyway. Arnaud Bertrand posted a great little story on Bluesky re the Amerikans in Africa, compared to the Chinese in Africa:
Trump has promoted the idea to “equalize” foreign trade competition by putting tariffs on goods as if America can somehow produce the same goods cost effectively. But this will backfire because America, by and large, is no longer a country that manufactures things in significant quantity. Besides, even those manufacturing countries producing cheaper goods imported to the US, have developed more efficient manufacturing methods in recent years. This has made these countries even more competitive. Robotics and various automated systems reduce the need for large manufacturing workforces. Historically, no developed country raises the manufacturing workforce by more than a small fraction. Efficiency makes this unnecessary. And the idea that the US can quickly replace industry and manufacturing jobs is mostly counterproductive, and virtually impossible. In fact, a US company will find it much more difficult to compete with foreign companies and may even be subject to retaliatory foreign tariffs.
The giant financial services company, JPMorgan Chase, examined the Trump tariff idea. JPMorgan started by assuming that Trump would impose 30% tariffs on China. In short order, 30% tariffs would increase US inflation—which is already bad enough; but by imposing 60% tariffs on China “the US economy, especially the US stock market, may be at risk of collapse.” It is useful to know that there are many Americans (over 50%) who have their wealth in the stock market—either directly or indirectly. Typically, this wealth exists as 401(k) Plans (employer-sponsored retirement accounts), Individual Retirement Accounts (IRAs), various pension plans, mutual funds, and the like. And a stock market collapse will produce the worst economic disaster in US history. A large number of Americans will lose their money, lose their jobs, and many companies and banks will go bankrupt. 1
What about China and tariffs? China would not suffer much from these tariffs. A number of global economists like Mo Ji, Chief Economist at the Development Bank of Singapore (DBS), predicts a nominal 0.5 to 1 percent loss in China’s GDP. China has already established strong trade ties throughout the Global Majority via the BRI countries (over 120). And overall, the ASEAN region is by far China’s largest trading partner—which surpassed trade with the EU in 2020. China does not rely on the US any longer for trade and export revenue. America is much more vulnerable to the tariffs on China.
One insightful Chinese analyst, Wang Huiyao, suggests that threats of increasing tariffs on Chinese goods is mostly bluff and bluster. Keep in mind, Trump is the so-called “deal maker,” or transactional policy maker. This speaks of a pragmatic approach to trade and a perceived competitor like China. Trump is likely to “open new negotiations with China on subsidy policies, overcapacity issues and trade imbalances. He could conduct second or third-phase trade deal negotiations based on [his first-term negotiations].”2 Amy Mackinnon, writing for Foreign Policy, points out that “Trump has repeatedly shown that he can be persuaded when it comes to Chinese business interests if spoken to directly. As president, he reversed positions on Chinese telecommunications giant ZTE after phone calls with Chinese political leadership in 2018, and on Huawei after meeting with Chinese President Xi Jinping at the G-20 summit in 2019.” 3
Wang Huiyao also observes that “Trump holds a relatively open attitude towards Chinese business investment in the US.” Perhaps this openness is borne out from Trump’s close ties to substantial companies like Tesla, Apple, and Blackstone—with long-term investments in China. This will likely influence Trump’s disposition toward China. And despite the China-US “trade war” started by Trump in 2018, the fact remains that trade volume between the two countries did not decline, but increased. During 2018, trade was at US$635 billion, and continued to increase by 4.9% yielding a trade increase to US$664 billion in 2023. The two countries are so intertwined that the de-coupling mantra among many politicians is simply fallacious.4 Cato Institute economist, Colin Grabow, maintains that rather than harming China’s economy “Tariffs will harm American consumers and businesses and ultimately the US economy overall.”5
From my view, Trump’s tariff policy will not work to stop China from prospering and leading the global majority. America’s hegemony is over.
1. Alex Wolf (2024) “Notes from Washington: Trade War Redux?” J.P. Morgan. Notes from Washington: Trade War Redux? | J.P. Morgan Private Bank Asia
2. Wang Huiyao (2024, Nov. 9) “Transactional Trump may well improve US-China ties” South China Morning Post. . Opinion | Transactional Trump may well improve US-China ties | South China Morning Post
3. Amy Mackinnon. (2024, Nov. 6) “What Trump’s Election Win Means for US Foreign Policy in China, Middle East, Ukraine” Foreign Policy. What Trump's Election Win Means for U.S. Foreign Policy in China, Middle East, Ukraine
4. Wang Huiyao. Ibid.
5. Colin Grabow. (2024, Nov. 21) “There’s still no economic case for new tariffs” Cato Institute. There's Still No Economic Case for New Tariffs | Cato at Liberty Blog
Who does this clown think he is, the only people he is threatening, is the livlihoods of American citizens. The US certaintly has not read world history because it is making every mistake all empires before it made and crumbled as a result.
I sent a link for a written contribution to the email address quoted. I don’t care if you don’t want it but a reply I should have thought is customary.
Since Biden didn't get to finally sign the US' death warrant, Trump is going to do it for him.
The only country who will really suffer, is the US.
Thank you. I appreciate your perspective. Such a breath of fresh air, because in the USA our media bombards us with racist anti-Chinese content.
Perhaps not exactly relevant to todays' post, but I thought I'd share it anyway. Arnaud Bertrand posted a great little story on Bluesky re the Amerikans in Africa, compared to the Chinese in Africa:
https://bsky.app/profile/rnaudbertrand.bsky.social/post/3lceumtmrfk2w
Li Jingling
Concerning Trump’s tariff threat.
Trump has promoted the idea to “equalize” foreign trade competition by putting tariffs on goods as if America can somehow produce the same goods cost effectively. But this will backfire because America, by and large, is no longer a country that manufactures things in significant quantity. Besides, even those manufacturing countries producing cheaper goods imported to the US, have developed more efficient manufacturing methods in recent years. This has made these countries even more competitive. Robotics and various automated systems reduce the need for large manufacturing workforces. Historically, no developed country raises the manufacturing workforce by more than a small fraction. Efficiency makes this unnecessary. And the idea that the US can quickly replace industry and manufacturing jobs is mostly counterproductive, and virtually impossible. In fact, a US company will find it much more difficult to compete with foreign companies and may even be subject to retaliatory foreign tariffs.
The giant financial services company, JPMorgan Chase, examined the Trump tariff idea. JPMorgan started by assuming that Trump would impose 30% tariffs on China. In short order, 30% tariffs would increase US inflation—which is already bad enough; but by imposing 60% tariffs on China “the US economy, especially the US stock market, may be at risk of collapse.” It is useful to know that there are many Americans (over 50%) who have their wealth in the stock market—either directly or indirectly. Typically, this wealth exists as 401(k) Plans (employer-sponsored retirement accounts), Individual Retirement Accounts (IRAs), various pension plans, mutual funds, and the like. And a stock market collapse will produce the worst economic disaster in US history. A large number of Americans will lose their money, lose their jobs, and many companies and banks will go bankrupt. 1
What about China and tariffs? China would not suffer much from these tariffs. A number of global economists like Mo Ji, Chief Economist at the Development Bank of Singapore (DBS), predicts a nominal 0.5 to 1 percent loss in China’s GDP. China has already established strong trade ties throughout the Global Majority via the BRI countries (over 120). And overall, the ASEAN region is by far China’s largest trading partner—which surpassed trade with the EU in 2020. China does not rely on the US any longer for trade and export revenue. America is much more vulnerable to the tariffs on China.
One insightful Chinese analyst, Wang Huiyao, suggests that threats of increasing tariffs on Chinese goods is mostly bluff and bluster. Keep in mind, Trump is the so-called “deal maker,” or transactional policy maker. This speaks of a pragmatic approach to trade and a perceived competitor like China. Trump is likely to “open new negotiations with China on subsidy policies, overcapacity issues and trade imbalances. He could conduct second or third-phase trade deal negotiations based on [his first-term negotiations].”2 Amy Mackinnon, writing for Foreign Policy, points out that “Trump has repeatedly shown that he can be persuaded when it comes to Chinese business interests if spoken to directly. As president, he reversed positions on Chinese telecommunications giant ZTE after phone calls with Chinese political leadership in 2018, and on Huawei after meeting with Chinese President Xi Jinping at the G-20 summit in 2019.” 3
Wang Huiyao also observes that “Trump holds a relatively open attitude towards Chinese business investment in the US.” Perhaps this openness is borne out from Trump’s close ties to substantial companies like Tesla, Apple, and Blackstone—with long-term investments in China. This will likely influence Trump’s disposition toward China. And despite the China-US “trade war” started by Trump in 2018, the fact remains that trade volume between the two countries did not decline, but increased. During 2018, trade was at US$635 billion, and continued to increase by 4.9% yielding a trade increase to US$664 billion in 2023. The two countries are so intertwined that the de-coupling mantra among many politicians is simply fallacious.4 Cato Institute economist, Colin Grabow, maintains that rather than harming China’s economy “Tariffs will harm American consumers and businesses and ultimately the US economy overall.”5
From my view, Trump’s tariff policy will not work to stop China from prospering and leading the global majority. America’s hegemony is over.
1. Alex Wolf (2024) “Notes from Washington: Trade War Redux?” J.P. Morgan. Notes from Washington: Trade War Redux? | J.P. Morgan Private Bank Asia
2. Wang Huiyao (2024, Nov. 9) “Transactional Trump may well improve US-China ties” South China Morning Post. . Opinion | Transactional Trump may well improve US-China ties | South China Morning Post
3. Amy Mackinnon. (2024, Nov. 6) “What Trump’s Election Win Means for US Foreign Policy in China, Middle East, Ukraine” Foreign Policy. What Trump's Election Win Means for U.S. Foreign Policy in China, Middle East, Ukraine
4. Wang Huiyao. Ibid.
5. Colin Grabow. (2024, Nov. 21) “There’s still no economic case for new tariffs” Cato Institute. There's Still No Economic Case for New Tariffs | Cato at Liberty Blog
Who does this clown think he is, the only people he is threatening, is the livlihoods of American citizens. The US certaintly has not read world history because it is making every mistake all empires before it made and crumbled as a result.
When inflation reaches 50%, who will the rubes blame?
I sent a link for a written contribution to the email address quoted. I don’t care if you don’t want it but a reply I should have thought is customary.
Hi Walt,
Sorry for the late reply. For some reason, it got into the junk box. Will get back to you soon. Thanks for the contribution!