It’s about China, stupid

[pittbb80]

Really good article that lays out what is really going on. Essentially Trump and company are trying to isolate China from the rest of the world and so far it appears as though it’s working

Three things you need to know about Liberation Day tariffs:

1. It’s not about the methodology.

The formula has been widely mocked, but that misses the point. The numbers aren’t meant to hold up in a PhD defense—they’re meant to shock, to create leverage. The more extreme the figure, the stronger the incentive for other countries to come to the negotiating table with the U.S.

2. It’s not even about the tariffs.

The real issue isn’t Vietnam’s tariff rates—it’s China’s trans-shipment tactics and its central role in global supply chains.

The aim is to isolate China and rewrite the rules of global trade. If a country like Vietnam is willing to align with that goal, it doesn’t matter much whether it sets its tariffs for American products at 0%, 5%, or even 9.4% (current rate).

3. It’s not personal with any country—except one. The tariffs are universal, affecting even places like Heard Island and McDonald Islands, sparking confusion and anger worldwide. But as Commerce Secretary Howard Lutnick explained, this blanket approach is designed to block every possible loophole China could exploit. In effect, all countries have become collateral damage in the U.S.-China economic standoff.

Until the two strike a grand bargain—or the U.S. builds a broad coalition to ring-fence China—the fallout will continue to ripple across the globe.

https://www.tabletmag.com/sections/news/articles/what-you-need-to-know-about-trumps-tariffs

 

[pittbb80]

Another good read

Years ago, noted leftist Noam Chomsky warned that the financialization of the economy, where profits are generated not by production but by MBAs moving numbers in endless circles, would lead to a dangerous concentration of wealth and power. We now live in the very nightmare his cohorts spent six decades bemoaning, only to fall silent when someone finally challenges its architects.

Where is the “Occupy Wall Street” ensemble in the face of the first real confrontation with the financial elite in living memory? Silent.

The money was never supposed to stop flowing. The outsourcing was never supposed to face tangible political opposition. It was only ever meant to be a passing and abstract idea to be alluded to in campaign talking points by Republicans and Democrats alike and then forgotten post-election.

When Joe Biden said, “We’re building an economy that rewards work, not wealth,” he must’ve meant stock buybacks, asset inflation, and foreign-owned supply chains. Because under his watch, the only thing being rewarded was proximity to capital, and the working class was left holding the bag. The Scranton-speak was window dressing; the real beneficiaries were hedge funds and multinationals.

Tariffs Aren't Bad For The Economy, Just For Elite Pencil-Pushers

The economy is worth saving. So are the people who built it. For the first time in a generation, someone is finally fighting to do just that.

thefederalist.com

 

[HailToPitt1985]

China will be the last guy sitting at the table at the prom. I'd hate to be China.

 

[pittbb80]

China will be the last guy sitting at the table at the prom. I'd hate to be China.

That’s the plan anyway. Let’s hope that’s the outcome

 

[NCPitt]

I can't know personally, but everything I read says that China's economy is in deep trouble. They will defend their trading advantages as long as possible. They have to in order to save their economy. If Trump keeps escalating this, though, they will have to cave. Either way, their economy takes a huge hit.

 

[pittbb80]

I can't know personally, but everything I read says that China's economy is in deep trouble. They will defend their trading advantages as long as possible. They have to in order to save their economy. If Trump keeps escalating this, though, they will have to cave. Either way, their economy takes a huge hit.

I’ve been there many times. It’s always been a house of cards. They prop their economy up by continuing to build buildings no one lives in. It’s incredible driving past ghost cities. I’ve played Lake Malaren several times as was always amazed at the multi million dollar houses that no one lived in lining the course. Without exports to the US which is by far their largest revenue source they are screwed. So this is a giant game of chicken

 

[ChiefJusticeMarshall]

I can't know personally, but everything I read says that China's economy is in deep trouble. They will defend their trading advantages as long as possible. They have to in order to save their economy. If Trump keeps escalating this, though, they will have to cave. Either way, their economy takes a huge hit.

What worries me........is you know why Japan attacked us WWII right?

 

[NCPitt]

What worries me........is you know why Japan attacked us WWII right?

Anyone with nukes always concerns me.

 

[Fk_Pitt]

I can't know personally, but everything I read says that China's economy is in deep trouble. They will defend their trading advantages as long as possible. They have to in order to save their economy. If Trump keeps escalating this, though, they will have to cave. Either way, their economy takes a huge hit.

Ok. So what if China calls in all our debt?

 

[PittMan2003]

I would love to see us work out deals with our allies and try to cut out China as much as possible.

 

[USN_Panther]

What if China sets up trade alliances with Japan, Korea other Asian/ Pacific nations and the EU?
China is making footholds in Africa too. I'm not so sure the nation becoming isolated in all this will be China.

 

[pittbb80]

What if China sets up trade alliances with Japan, Korea other Asian/ Pacific nations and the EU?
China is making footholds in Africa too. I'm not so sure the nation becoming isolated in all this will be China.

Doesn’t look like they will be making alliances with Japan. Vietnam virtually rushed to start negations with China. Not sure about all of SE Asia but I met a guy in Singapore at a conference who was from Indonesia. They despise the Chinese government. The Chinese are smarter than the US for sure. They just don’t hadn’t out aide. When they Bribe the politicians they end up owning significant assets as well as creating jobs for their citizens in the nation they bribe. During Covid you heard about the Chinese in Northern Italy.

There was an article I posted yesterday that said many of these countries are not waiting to form alliances because first of all they don’t trust the other countries and secondly no one wants to be the last to cut a deal.

 

[NCPitt]

Ok. So what if China calls in all our debt?

Tell them they can eat their bonds for breakfast. That's one way to lower the debt.

Btw, I'm being facetious.

I don't think would do that because it would them, maybe even more than it would us. But it does point to the problem that Trump is trying to fix. Trade imbalances cause outflows of dollars used to purchase American businesses, properties in the US, and US bonds.

 

[HailToPitt1985]

I would love to see us work out deals with our allies and try to cut out China as much as possible.

China needs our coal for their many coal-fired plants. They can't supply the coal themselves and we have huge coal resources. That's how we put the screws to China.

 

[USN_Panther]

Tell them they can eat their bonds for breakfast. That's one way to lower the debt.

Btw, I'm being facetious.

I don't think would do that because it would them, maybe even more than it would us. But it does point to the problem that Trump is trying to fix. Trade imbalances cause outflows of dollars used to purchase American businesses, properties in the US, and US bonds.

US debt, as I am sure you are aware, is not from traditional loans. It is from Treasury bonds. Not honoring them would tank their value and make it impossible for the US to issue any more to "borrow" money i.e. raise funds.
Tanking the value of the US dollar (printing piles of money) reduces the "debt" as it reduces the purchasing power of the currency attached to the bonds. But that also affects the purchasing power of all of America.
If course manipulation of currency value would impact the use of the USD as the reference currency of the world.

 

[USN_Panther]

China needs our coal for their many coal-fired plants. They can't supply the coal themselves and we have huge coal resources. That's how we put the screws to China.

Doesn't that further affect the trade imbalance?

 

[TheSpecialSauce]

China will just take over other countries. Some of you guys are real asshats if you think China is just going ball up and wave a white flag. Donald Trump continues to throw gas on a fire that he created.

 

[pittbb80]

China needs our coal for their many coal-fired plants. They can't supply the coal themselves and we have huge coal resources. That's how we put the screws to China.

I think China is getiting coal from other countries now but I’m not sure they’ve weaned themselves 100’pxr from us coal

 

[OH Pete]

China will just take over other countries. Some of you guys are real asshats if you think China is just going ball up and wave a white flag. Donald Trump continues to throw gas on a fire that he created.

I'm afraid they will invade Taiwan sooner vs later. Other than actual force, Donald is shooting his wad right now with what we can do to combat China. Pissing our allies off so badly wasn't the sharpest move - they may not be there to help us enforce economic sanctions.

Regarding the use of actual force - it is a zero sum gain for the US, at best. Our superior technology would be no match against them in the ground war that would be required to liberate Taiwan. Our ability to fight China over Taiwan is pretty much limited to isolating China from the rest of the world. And now Donald is F'ing that all up.

 

[OH Pete]

I think China is getiting coal from other countries now but I’m not sure they’ve weaned themselves 100’pxr from us coal

They get a lot from Australia.

 

[pittbb80]

I'm afraid they will invade Taiwan sooner vs later. Other than actual force, Donald is shooting his wad right now with what we can do to combat China. Pissing our allies off so badly wasn't the sharpest move - they may not be there to help us enforce economic sanctions.

Regarding the use of actual force - it is a zero sum game for the US, at best. Our superior technology would be no match against them in the ground war that would be required to liberate Taiwan. Our ability to fight China over Taiwan is pretty much limited to isolating China from the rest of the world. And now Donald is F'ing that all up.

Right now just about every significant country has reached out to negotiate with the US. So it would appear that the strategy outlined in the article posted above is working (ie isolating China economically). Long way to go for sure but there are initial signs that the tarrifs are doing what they were intended to do which is isolate China and provide a significant incentive to bring back manufacturing to the US. As I said there have been other articles written that indicate why other countries won’t align themselves against the US.

 

[HailToPitt1985]

I think China is getiting coal from other countries now but I’m not sure they’ve weaned themselves 100’pxr from us coal

Yes, China gets some coal from other than U.S. mines. But around 50% comes from U.S. They'd be hurting big time if we cut them off. The others just don't have the capacity. And China has over 1,100 coal-fired plants, we have around 200.

 

[NCPitt]

US debt, as I am sure you are aware, is not from traditional loans. It is from Treasury bonds. Not honoring them would tank their value and make it impossible for the US to issue any more to "borrow" money i.e. raise funds.
Tanking the value of the US dollar (printing piles of money) reduces the "debt" as it reduces the purchasing power of the currency attached to the bonds. But that also affects the purchasing power of all of America.
If course manipulation of currency value would impact the use of the USD as the reference currency of the world.

Did you see that I was being facetious?

 

[pittbb80]

Yes, China gets some coal from other than U.S. mines. But around 50% comes from U.S. They'd be hurting big time if we cut them off. The others just don't have the capacity. And China has over 1,100 coal-fired plants, we have around 200.

Yes no doubt. I am very familiar with the Chinese coal fired power plant market as we had a JV with a “private” Chinese company for environmental
Technology related to CFPs. I just havnt kept up with the data recently and I’m not sure if their new buddies the Russians are helping to offset US coal