Sunday, May 12, 2019

Chinese Walls

Trump is trying to get China to agree to a better trade deal with the United States, and by a better deal, he means one that will more greatly benefit the U.S.   In the absence of one, despite continuing talks with the Chinese, he's just hiked tariffs against China, already at 10 percent, to 25 percent.
Trump says that he'd hoped to avoid raising tariffs but adds that they will benefit the average American by spurring more U.S.-based manufacturing, though none of his economic policies have shown any payoffs.  China makes practically everything sold here.  The tariffs, if they stick in the event of a failed trade deal, would only increase prices on consumer goods in U.S. stores, while U.S. importers can simply avoid the brunt of the adverse affects of higher import taxes by lower profit margins and cutting costs.  "Most importers, Reuters recently reported, "use a mix of such tactics to spread the higher costs among suppliers, consumers or buyers."
Stocks went down recently but have rallied - damn! - after trade talks with the Chinese ended prematurely but with the promise that progress had been made and that they would resume, Trump is hoping that the incredibly strong American economy - damn again! - will provide leverage against the Chinese, but they hold a great deal of low-interest U.S. Treasury bonds that allow them to exact a little leverage of their own  As James Howard Kunstler put it:
A great deal for us while it lasted. Or so it seemed. Eventually, China caught onto the swindle and began liquidating its US bond holdings to buy gold and other real goods like African mining rights and farmland, Iranian oil, and port facilities in strategic corners of the world . . .. Now China has obviously designed a policy to dissociate itself as much as possible from the losing trade racket with us and replace the American market by increments with whatever customer base it can cobble together from the rest of the world.
The Chinese could bring down that incredibly strong economy of ours if they wanted to, but we're going to be bringing it down ourselves when we allow ourselves paying more for goods that shouldn't be so darn expensive.
Alas, Trump will probably still be re-elected, because he can always rail against Central American migrants and wear down Democratic efforts to investigate him.  He wants to investigate the Democrats for trying to rig the 2016 election to prevent his victory.  Trump supporters are that hell-bent on keeping their guy in power - they may be underemployed and overstressed, but as long as Trump, and not Hillary or Bernie or Mayor Pete or even Uncle Joe, is President, they can sleep more easily.  And he's already blaming the Chinese for whatever harm might come to the U.S. economy, because, hell, you can't trust them furriners.

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