Trump's trade war has blown up out of proportion with China retaliating fast unlike in the past. Trump thinks no country dared to retaliate, still thinking that the USA is the only market left in this world for others to sell to. He is delusional. China does not make false threat of being ready to fight all wars against the USA, does it?
I was honestly thinking that China would have to retaliate but not retaliate that aggressively with a 34% tariff on all USA goods on top of further controls of more rare earth element export to the USA. The further rare earth element control is not just against the USA alone, but to all countries that may choose to re-export those rare earth elements to help the USA. China is closing all loopholes, the same way that the USA is doing in high-end chips against China.
With China now retaliating, that is almost an umbrella cover to tell others that they should retaliate and not be stepped upon by the USA at its whims and fancies. Rather a fast retaliation than suffer a slow strangulation by the USA.
Now, Trump is trying to walk back on the pretext of negotiating with India, Vietnam and Israel over the reciprocal tariffs he imposed, just a day after. What is he trying to do and who is he trying to fool? Trying to scare China? China does not care about negotiating now, and action speaks louder than words. According to analyst, Chinese manufacturers just shrugged off those tariffs, knowing they can compete against anyone in price in the USA market and outside the USA and EU as well.
India is not going to supply the USA with the same cheap consumer products on the scale that China is now doing. Ten or twenty years down the road is not even feasible for India, and USA consumers will have to take the shit in the face when it hits the fan. China took three decades to reach its manufacturing capabilities, and can India do that? India's exports to USA in 2024 was about US$80 billion, compared to the US$500 billion that China exported to the USA. India is not going to provide the alternatives for Walmart or Amazon to cater to USA consumers. Therefore, even cutting the tariffs to zero is not going to encourage more Indian exports to the USA.
Vietnam wants to cut tariffs to zero for the USA and wants reciprocal action by the USA. Now, this is a no brainer for the USA, as Vietnam is just an extension of the Chinese manufacturing base overseas. Trumps tariffs are all about crippling China and Chinese manufacturing investments overseas and giving Vietnam a backdoor for Chinese manufacturing to access the USA market without tariffs is unthinkable. You think this will work?
Anonymous
2 comments:
Up to now, the advisors of Trump in the White House, trade hawks like Scott Bessent and Peter Navarro are still claiming that China is still highly dependent on the USA market for its exports and the USA does not depend on the Chinese market, and therefore the USA has the upper hand in any negotiating with China.
These advisors forget that China has the rest of the world market to sell to, while the USA is boxed up selling expensive weapons and no consumer goods to the rest of the world. Yet they are gloating about producing the stuff needed by USA consumers, by luring manufacturing back to the USA and creating jobs in the process, just conjuring up make believe from thin air.
When USA is clearly buying more from China, can the USA be said to be less dependent on China, while China buying less from the USA is deemed to be more dependent on the USA? From this, we can see who depends more on the other. Scott Bessant appears extremely nervous trying to carve out a solid explanation of the warp thinking in a situation that is clearly not to the USA's advantage, claiming that a country in deficit is holding the upper hand while the one in surplus is holding a weaker position. For a person touted to be highly intelligent and experience trying to sell such an argument just boggles the mind.
Right now, every sycophant advisor catering to Trump's tariff war is spouting what Sean Foo calls 'voodoo economics', devoid of reason and just clutching at straws to support their arguments. In ancient China, when eunuchs gave false advice to the emperor to appease and gain merit from the emperor, it often leads to disaster. It is happening in the USA now.
China exported US$500 billion worth of goods to the USA, or about 2.9% of its GDP, which is growing at 5% per annum. Will that 2.9% loss lead to the collapse of China? Bear in mind that some of the US$500 billion exports to USA are generated by USA companies manufacturing in China as well. Apple and Tesla are examples, and they will suffer too.
Trump wetted his pants and had to pause his tariff war.
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