6/26/2024

Bankrupt European states wanting to conduct trade wars with their biggest market? How silly can they be?

 The Europeans are spooked by China's imposition of tariffs on European cars entering China. That is not all. China is intending to do to the EU what it did with agricultural products from the USA at the start of Trump's trade war. China is no more just taking it lying down. China has shown its ability to retaliate and that frightens the Europeans.

Who stands to lose the most? German car makers will face the biggest hit. Other EU countries will be hit by products like pork. I believe that is just the beginning of China's retaliation. China has found alternative markets in South America and Russia and is mending relations with Australia and New Zealand as well. The recent visit of Chinese Prime Minister Li Qiang to New Zealand and Australia is not for exchanging T-shirts to quote LKY. China is too big a market for them to resist.

If Russian cheap energy crisis is already crippling Europe, can the EU afford another disaster happening with its agricultural sector? This is not a shortage of agricultural products befalling Europe. It is the shortage of demand from the Chinese market that is the problem. European farmers are already at wits end trying to compete with outside producers like Ukraine. The recent farmers protest says it all. It is no use for the EU trying to export its agricultural products to the USA, which is just like 'Carrying coal to Newcastle' to quote an outdated saying. Newcastle itself already had so much coal and sending more coal there is a pointless action.

Elsewhere in South America they are producing just as much agricultural products for export to China, and already competing with the EU. Mess with China and suffer the consequences is something the Europeans better learn.

Anonymous

2 comments:

  1. The EU is committing Hara Kiri. In another sense the USA is doing mercy killing or committing Euthanasia against the EU. But never mind, it is all legal among close allies. No harm done!

    No one wins in a trade war. Only Donald Trump, in his warp mind, thinks that trade wars are easy to win. Has the USA really won yet after so many years? In spite of the trade war, China is chalking up even bigger trade surplus with the USA. To indicate any semblance of winning, the trade balance should tilt the other way. But that has not happened, and it tells us the true story.

    When Trump gets his second term, he is going to make USA even greater again. Already he promised 100% tariffs against Chinese EVs. Amidst all this hype up action, Chinese EV manufacturers appear set to ditch the USA, EU and Canada EV market altogether. On the other hand, China is set to impose retaliating tariffs on the EU cars, with an ultimatum that those EU tariffs be removed by July 4th in the run up to talks.

    The situation smells trouble for USA and EU carmakers. While Chinese EV makers can always migrate from markets in USA and the EU to the much bigger Global South market to mitigate their losses, this is not possible for USA and EU carmakers in a Global South market they cannot compete.

    Will that entail the USA passing laws or signing executive orders to prevent the sale of Chinese EVs in the Global South as well? The USA seems to believe that it can unilaterally enact laws that other countries must follow. Countries in the Global South will give the USA their middle fingers. The Africans will be the first to do that.

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  2. De-dollarization is progressing much faster than expected and is good news for BRICS but distressing to know for the USA and the West. Venezuela, as expected is joining BRICS. Venezuela is reported to have the biggest oil reserves in the world. Trump wanted to seize those reserves during his first term and the USA is eyeing that as well today.

    With that, BRICS would be controlling global oil with Saudi Arabia, UAE, Russia, Iran and Venezuela put together. They would then be pricing oil outside the US$ for sure when the time comes. That will be a major nail in the coffin of the US$ hegemony.

    What about other resources that BRICS countries are playing major roles? Brazil, Argentina, Russia are big players in grain production. If trade is carried out under BRICS, the US$ is also out of the equation and diminishing in demand.

    What about metals? Those are essential and major commodities that are found in vast quantities in South America, Africa and Central Asia, with large concessions under the control of China or joint venture with China. Not only that, but China is also controlling the processing of most metals needed by the world.

    Sure, it is time to play catch up for the USA and Europe, but the time factor is too big a gap for them to draw level fast enough. Processing logistics, supply chains and manufacturing setups are easy to talk about and dream of, but not so easy to bring about to fruition.

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