There’s too much developing in the Chinese trade issue to ignore. Chinese state media is now calling for a “people’s war” accusing the U.S. of “greed and arrogance.” This is a sure sign of desperation.
The trade imbalance between our two countries is gargantuan. We export about $120 billion worth of goods to China. We import $539 billion. Our biggest import from China is computer equipment. Their biggest import from us is transportation equipment. But transportation exports only amount to the 6th-largest import from China, which is fabricated metal. In other words, we are the customer, they are the seller. That puts us in the driver’s seat.
As this trade war escalates we’re now looking at two likely scenarios. Either China will buckle or we’ll take our business elsewhere. The latter would be just fine with me. President Trump tweeted, “Tariffs can be completely avoided if you buy from a non-tariffed country.” Too many experts are ignoring that little passage. I think it’s very telling.
President Trump has been negotiating from a position of strength with the Chinese since he took office. As a businessman he knows the ins and outs of trade. He understands negotiating. He also realizes that the Chinese have been eating our lunch for decades. Why? Because too many politicians fear that if they make China mad they’ll stop selling us cheap junk. How is that even a possibility in someone’s mind? That’s like saying if you don’t continue to overpay at the Chinese restaurant down the street they’ll tell you you can’t eat there anymore. Guess what. There are plenty of other places to eat. You don’t have to continue to get gouged at the Chinese restaurant. You can eat Mexican, or Taiwanese or South Korean.
That’s exactly what’s about to happen. American companies can source their products from a different country at the drop of a hat. Tariffs start to squeeze profits from China, they just relocate their factory to Taiwan. The Chinese are bound to know this. They just didn’t know we did. Not until they started dealing with Trump.
Trump’s historic resetting of trade policy may have lasting positive repercussions for generations to come. Imagine if we stopped doing business with China. We are, by far, their largest trading partner. We’re almost doubling the business of number 2, which is Japan. The bottom line is if they lose our business they’re in big trouble. Think of us as their client. They have others, but we’re the big cheese. If they lose us they’ll still have the others, but they’ll have to close the doors.
China has been on a quest for world domination. They planned to do it through manufacturing, making countries dependent on them for cheap goods. Use slave and near-slave labor if you have to. Let the Chinese government step in and subsidize Chinese goods to run everybody else out of business. Dominate with trade and you rule the world. Trump is about to put a stop to all that.
If you didn’t know better you’d think Trump was trying to bring communist China down, just like Reagan did with the Soviet Union. Talk about something that would have a lasting impact. Imagine a billion and a half people suddenly free from a brutal dictatorship. Imagine what the Chinese could do if they had a truly capitalist society. You don’t have to imagine. Just look at Hong Kong. It’s a microcosm of what the Chinese looks like without the yoke of communism.
