Written by Tom Luongo; Originally appeared on strategic-culture.org
I hate to break the news to China bashers, but the trade war with the US is over. I’ve maintained for months that Trump has no leverage in trade talks with China. If he did China would have done a deal by now.
They haven’t and they likely won’t unless you are talking some form of deal which allows Trump to save face here. But to be honest I’m beginning to doubt whether anyone in the White House cares. This is about the Great Powers Game and the simpleton idea that for one country to win in trade another has to lose.
This is, of course, nonsense.
Trade is not a zero-sum game. Ideally, all voluntary trade is a win-win scenario for both the buyer and the seller. If it wasn’t the trade would not be made. Lost in the numbers is the comparative perceived value of the exchange.
China is still running a massive trade surplus and that is true. But from the perspective of US trade, that is as much a function of Trump’s own profligate spending habits as any structural inequalities.
Trump is running a $1 trillion budget deficit. This is money that is conjured up out of thin air by the miracle of selling bonds. $1 trillion in bonds. Where do you think those $1 trillion in government expenditures goes to?
The moon? Laos?
No. It goes to China. It also finds its way into the US equity market Trump is so in love with and other places that produce goods that we Americans buy with that money. If Trump wants to win the trade war with China he should consider spending a little less money allow consumer prices here in the States to fall and let his tax cuts continue to attract capital for the right reasons – the value the American work force is capable of generating.
Instead Trump slapped 10% tariffs on Chinese goods last year. This has done nothing except exacerbate the trade deficit with China. The overall trade deficit is now at record levels.
Moreover, China responded exactly as one would expect, by allowing the Yuan to depreciate by roughly 10%. It did so for a number of reasons.
First, to protect domestic exporters as one would expect. But more importantly, to assist vulnerable Chinese banks exposed to any slow down and keep them liquid, which it did through Central bank operations.
Over at my blog recently I noted:
China’s not going to implode over these tariffs. It will give Xi and his central bank the opportunity to devalue the yuan in response to the slower flow of dollars. It has to protect the lion’s share of its trade with Southeast Asia and Europe whose currencies are already in trouble.
And it will bail out the most strategically-sensitive banks and businesses over-exposed to them. It’s what they did last year in response to the 10% tariff and it is what will happen this time.
Lastly, however, is the part no one actually wants to discuss which is that China has to protect its trade with Southeast Asia and Europe. The Yuan didn’t devalue in a vacuum. The euro is down 13% from its high as are currencies like the Indonesian Rupiah, the Malaysian Ringgit and Thai Baht.
What Trump and his team are arguing for in trade negotiation is no different than what they’ve offered Iran and Lebanon, surrender your sovereignty or face punishment.
So, China reciprocates and cuts off US soybeans and other food exports. Now, a year later, Midwest banks are facing surging bankruptcies from farmers hit with the double whammy of no exports to China (who now buys them from Brazil) and massive flooding from an abnormally vicious winter and spring.
They have Trump to thank for this. He didn’t help them by not thinking through how we could be hurt by China’s reaction to his belligerence.
The same way Wisconsin dairy farmers are also going bankrupt thanks to the continued flood of cheap European dairy keeping wholesale milk prices low. Why is this happening? Russia countered European and American sanctions over Crimea with a ban on imports of European dairy.
These were both core groups that defected from Hillary Clinton in 2016.
Let’s shift gears now and talk about what’s really going on.
Trump’s team would be fine with a trade deficit if China was still recycling that trade surplus into US Treasury bonds. They aren’t. The Chinese have held their stock of US debt between $1.1 and $1.25 trillion for two years now.
They are sending a lot of those dollars back out into the world to fund their massive Belt and Road Initiative (BRI). They are also using them to power swap arrangements with countries feeling the bite of Trump’s sanctions. Countries like Turkey, Pakistan and Iran, for examples.
To the paranoid schizophrenics who run his White House can only see China rising as a threat not a complement to the US.
Again, these are people with a zero-sum view on trade.
They, like Trump, only see things in terms of power. And if China is running a surplus they are gaining it and we are losing it.
The push to sanction the world and stop the unapproved use of the dollar is beginning to have catastrophic effects on the world economy. People like John Bolton and Secretary of State Mike Pompeo don’t care about those things. In fact, the more our ‘enemies,’ as they see them, suffer, the better it is for us. Such is their reductionist view of the world.
In no way do I believe China is somehow blameless or anything. They have taken egregious advantage of the US’s terrible policies for decades. But they are also shifting away from their mercantilist policies as Xi shifts the economy away from exports and towards a domestic consumption model.
It’s already happening as China’s trade surplus falls as a percentage of GDP and domestic consumption and investment take over.
The next steps will be interesting. I expect Trump isn’t bluffing now about raising tariffs to 25%. I also expect that China will again stop all purchases of US oil like it did between November and March under the threat of sanctions due to buying Iranian oil while letting the Yuan fall sharply.
After that the real energy war starts as Russia completes Power of Siberia and begins pumping natural gas to China. And China directs its state oil companies to buy more oil from Iran while lowering its purchases from Saudi Arabia unless the Saudis accept Yuan for it.
That’s where the real leverage in this whole fiasco lies. Trump is trying to blackmail the world with expensive dollars and cheap oil. But as he sabotages global trade and unleashes chaos worldwide the dollar will rise, not fall, as a mad scramble for dollars to pay debts will accelerate. It’s already starting.
Interest rates, now low as investors look for safe-haven assets, will spike much higher as central banks disgorge their US debt to defend their currencies. And the frackers who have issued all new junk bonds will be trapped as oil prices collapse and debt servicing costs rise.
And there will be another constituency ready to lynch Trump come election time.
Florida man can’t even https://youtu.be/Y4KDMN7iLfs?t=901
Good video and reality in my opinion.
Trump is just the real face of US politics without the makeup .
BOYCOTT ALL from China and Russia .
Piss Off Hasbararat…
You forgot one product: the greens, even Soviets wanted the greens
Did you missed the main idea? If China puts 25% tariffs on the US oil, then remaining China suppliers like Iran or Russia would sell their oil to China in yuans, because of (sic!) sanctions imposed on them by USA. I think, now is just the right time to read what petrodollar means and how it is connected with the US dollars international demand.
If China had such great leverage over the US – as you hope – they wouldn’t give a crap about sanctions, the same with Russia.
The only hope I have is Jesus Christ. In all other cases is just pure logic and facts. China can easy destroy the USA economy by selling it’s 1.1 trillions share of US Govt. debt. But it will collapse the China’s trade. So the moves are made in long term perspective. The day China will massively buy the oil in yuans can be considered the beginning of the end of the USA empire. Not dollar system, but USA. Because dollars are issued by FRS which is the private banks conglomerate. Your country hosts FRS just because bankers are still believe your army can somehow protect them. And that is the second variable of the equation: USA felt in Syria and Libya. If your SF fail in Venezuela it will drastically drop your reputation as global power.
And sincerely I have no overall view on the equation. Just on some it’s very important parts.
Since you have an anglo-saxon name, may I ask why did you assume that I’m American? Is my English that good for you?
“Anglo-saxon”? 70% you are not American neither Brit. As for English, there are a lot of Americans who speaks English worse than me and you. Here on SF I spotted only few people with perfect English. Quite perfect, if we won’t take commas as mistakes.
And do you have any observations over my point of view about current global situation?
Yes, they would and do.China and India is much more dependent for oil from ME then USA is.
Europe is very dependent too, but at least have a plan for re newable energy, which is to slow makes good progress compared to needed changes.
That change is far away. It can be more relevant when we hardly use oil anymore.
It seemes China statistics as well asthe Yuan is very overestimated and by that the growth is slower then told.
A lot can happen.
Your use of “american oil” makes no sence. The owner ship is very much spread out as well as You talk about the first steps in oil and not about the many others.
Most money from oil and gas are made far away from crude and fuel and growing.
You can be owner by being a stockholder in many of those big companies.
Jens, could you please name me one of G20 countries, which statistics is not overestimated?
As for the “american oil”, the USA has a very strict legislation in the oil industry. But the main question is not about the owners, and even not about how fracking pulled out USA economy after 2008. It’s all about the international demand of dollars. The real power of the USA is not in nukes or carriers, but in the USA dollar. If dollar looses it’s position as main reserve currency, then USA is doomed.
Because of the cheep stolen knock of garbage from Russia and chinyland ???? Say bye bye 2019 wont be kind to the wasteland Russia or yao fung chow .
Again patchy English.
Don’t pay to much attention to him. He is just Ukrainian wannabe.
Is that really relavant.
Bye Bye Hasbararat….send my regards to Hell Aviv
Hashbara reduntant.
Fuck ISISraHell…the United States of America….the United Kingdom & France….& their Filthy Hasbararats
How does it feel to be a Loser?
You will be busy next many days. It includes women and children too :)
You became a Smart Cunt right? It is your Paedophilistic Satanic Brothers who fuck kiddies…are you a Paedophile?
Ukrobitch say bye bye to maidanazi shithole wasteland “ukraine” – third world banana republic owned by criminals and terrorists (and jewish clowns)
None says, it will remain like that. They collapsed as a part of USSR.
Again crap based on nothing or the opposite.
You are crap….
Comming from You, I take it as a compliment.
If you boycott anything from China and Russia then who will suffer we American. We will lose jobs. Our companies will suffer. Our companies and manufacturing plants depends on China and Russia. Even talent is there not in America. We copy everything from them. Still we several decades backward from China and Russia. Nobody want to buy our weapons except Saudi kingdom and their allies. The Russian S-400 is far superior than our Thaad.
Yeah your English is so good, you sound like a real American. That depends of Russia.
America is diverse and her education system is perverse.
Mind you. so is the UK system these days.
The great minds of school inspectors have just realised, after a few decades of allowing kids to run wild in school, and expecting the pupils ‘self discipline’ to be sufficient in creating an orderly teaching environment, that all we have now are unhappy teachers, ignorant kids ( in both senses of the word), degraded qualifications and an increasingly unemployable labour force.
Those Brits/Muricans that write like ‘Rob” don’t have time to spend on this kind of sites, they are looking for ‘fake Vuitton purse’
Thats not correct. The Brittish problems are many, but the main ones are the ones from the incommers and a very good reasons for the twists in Brexit.
They cant solve that as well as their own old days school at the same time. So much energy and money has been used for that Madrassa attitudes.
To me its a matter of many small adjustments incl. a reduced import og people being as it onece was in GB or even worse.
I dont see those running wild. You do,because You think we should copy Your infantile systems making chilkdren, women and the rest of us into robots because some Allah or Stalin once said so.
Enjoy your patchy English.
At least I won’t say that USA economy depends of Russia economy
Not only economy rather their defence is also depend on Russia. Why trump send pompeo to Moscow to get permission from Putin to get rid of Iran. LOL
Please explain how US economy depends of Russia. I already know the China theory but this with Russia is new for me.
You don’t know because you are new in this game.
Almost all can see that. You dont have to be old in that. Statstics tell things well.
Old also can be outdated and worse then rusted.
I think it was written ass a kind of joke. Many Russians and their few friends see themselves as being very big.
Assad often is descriebed as commander of the Russian army as well.
You could improve Yourself very much making relasion maps among countries as well as tradesystems.
A lot in Syria and Iraq is like that having many players much more complicated then Hitler and Staling traded Estarn Europe andsoon after Stalin, Hirtler, Churchill and De Gaulle traded Hitler and Mussolini being partly affiliated to Turks.
The relations in Eastern Asia was the same thing. Some sometimes forget that most of the dead ones there was chinese having a civile war as well as most of the brittisch dead ones in WW2 actaully was from India, Pakistan and Burma. Many phillipines died too and still were and amerian possesion.
Its the other way. When USA and we dont like Iran Russia is happy,becaise the oild and gas prices gets up and goldiggers in Russia are allowed to have weekend:)
Hardly nothing depends on russia anymore. They have not solved much since their USSR collapse.
Your a non American Russia troll that can barely grasp English so you know where you can stuff it , You are so fukin backwards you have a great life , soon we wont need trolls get your OT in loser .
Actually Rob can write in excellent English.
How’s it feel to be screwed with, trolling the Tonto troll. LOL
I am indigenous native American, idiot. I am not the one from terrorist American migrent who making us notorious in entire world communities and who have stolen land from us. Stuped
We all have traditions – bad and good ones.
I know your tradition like pompeo have disclosed that we lie, cheat and steal and I think you will definitely proud of it.
I vote for that comment of Yours.
Most of that is vertical incorrect.
You should boycott all the electronics that you own that are made in China.
Then we shall not hear from you again, and we will celebrate your departure from this site. :D
Excellent answer.
/sarc
You dream my friend, most of us love China stuff.
More than a liberal country, the US is a mafia country that imposes its racket. https://uploads.disquscdn.com/images/6b0dc91834478e071f154ca0b1b2ad3965d4f06d517c433df67fffa44cc3dbf8.png
All governments are mafia, US is the most powerful
In the West it is the Jewish mafia, FED, FMI, ECB which commands. 2% have 95% of all wealth. Who makes the war to whom?
In Russia the difference between the Jewish oligarchy and the rest of the population is even bigger.
Not in Russia, in US they have the FED and make dollars.
Nothing wrong in making money.
Ask the billion people who survive on two dollars a day if it’s right or wrong.
And Russian oligarchs bathe in Dollars
They live in Vladivostok or what :)
Compared to other solutions, we are doing fine.
It would be nice, if You could tell, where we can send western Emmigrant to or copy good parts from.
Lots of things comes from China. Trump has increased tariffs on imports from China mean that the American dollar lost its value. Before what thing we had bought on $100 now we will buy the same item on $200. Very good strategy of Trump. Make America shit again. LOL
No, its not. The problems are around the Yuan being too low as well as they can own things in the rest of the world, but we can go into theirs as equal ones.
EU and others has the same problems. We now tax more and more from them as compensation instead.
Nothing wrong in using money with more or less zeroes in its behind. Its about whay You actually can buy for it, which matters.
The same goes for tax. If You pay high tax and actually gets a lot again becauise fx school, medicantion and pension instead are already paid, it often is a good thing.
Low and high tax is bad, if the money and hard work just evaporate for nothing.
USA has big problems, but they probatly are not at all, as You descriebe. USA for the moment has the lowest unimployment rate for many years. Too many are too low paid, but they do have jobs, som the problems are how they spend them for the future, which should be changed some.
That an internal problem and hardly no poblem for the rest of us.
The world economy is fine and our system makes solvations partly by itself.
And again I compare it with other systems. Would I take in them in stead. Hardly. I might take in some smaller parts and replace or adjust the worst of ours.
Putin is the international murderer and the world knows that .
You are so brave! If Putin is international murder, why then you are not scared to write it in the Internet?
The World you means you yourself and that is all. Canada is a USA vassal and USA is an Israel vassal. So, it is not strange that USA-Canada-Israel have the same opinion on the sane thing or person.
And some few Jews run a billion muslims because they have learned You Muhammed Economics as well as written the Holy Choran for You.
1001 arabic deep god night excises for changing nothing as usual.
liar .canada is a gaylord country.and a puphet from the usa .
@Trollonto Tonto is not from Canada, he is an ukrainian troll, sick little bitch from Lwow
Thats not even the point.
Canada is a good partner in western economics. You really dont get us. We are not Your usual USA.
Putting in things around gays and puppets makes Your comment even more strange.
Lwow Turd you are a pathetic, retarded loser troll from Ukraine Today and we know that.
Putin isnt the only one…true
You are an international Hasbararat and we all know that
I cant see that the point explaining anything apart from someone like You.
Oh yeah!
https://www.youtube.com/watch?v=PRAAwTCojRY
You can be stockholder.
That’s why US Air-Carrier is closing Irans oil export by sea.
Another thing is, Obama spent -2,5 $trillion per 2 years in his time. Trump is on 40% of that spending plus he got sales contracts and a lot of jobs home.
Jobs at home in the US that make weapons specifically for nations that chop peoples heads off for the crime of ‘thinking different thoughts’ are nothing for Trump to brag about though.
The question is not about what USA gets in short term. It’s all about strategy.
Sun Tzu. On the art of war.
People like John Bolton and Secretary of State Mike Pompeo don’t care about those things. In fact, the more our ‘enemies,’ as they see them, suffer, the better it is for us. Such is their reductionist view of the world….
THE SOONER JOHN BOLTON & MIKE POMPEO HANG IN A TREE THE BETTER IT IS FOR US….SUCH IS MY REDUCTIONIST VIEW OF THE WORLD
Even I realised that trade is a chain of companies who all need to make a FAIR profit to survive.
Material purchases I made from companies were only possible in the medium to long term if I and others paid a fair price that ensured their stability.
During recessions I did not ‘put the screws on’ prices I paid, with the exception of a few multi nationals who deserved it, and in the good times, the fair companies did not try to rape and pillage me.
Again a selective relative. All countries do that. Only the methods are different.
Your “suffer” is a relative as well.Wiorld economies slightly or rapidly change. It has done that in 1000 of years. Its about needs.
Western economics says we now neeed each other. China and USA cant produce a lot if none can effort to buy it incl. themselves.
So its a matter of making no more hostilities then needed but instaed replace it with gareements among states and among companies as well as inclsuding all inhabitants so all in different levels are joiners.
You are a Mentally ill Motherfucker
China and the US do not need to trade with each other at all.
It is destroying the earth. Shipping hundreds of metric tons of crap every day across the ocean is destroying the earth.
China and the US both need to be independent like Iran is.
They need to learn to do for themselves.
God, or Evolution if that is your thing, placed a separation barrier called the ocean to keep these two apart.
They cannot get along, so they need to separate.
All of the anti American Zionist swamp traitors are guilty of treason.
https://www.youtube.com/watch?time_continue=8&v=MyGoVnXxf7g
Stop the video at 2.06 and observe… all the proof needed that the “plane” was a CIG. The WTC buildings were brought down by explosives.
If it was CGI, I haven’t seen an expert analysis of it.
There isn’t enough material on the ground for it to have been a conventional controlled demolition. If explosives were used. They were augmented by some type of directed energy or other unidentified technology.
https://www.youtube.com/watch?v=3wJ1cFX1SEo
it’s called “thermite.”
If there was not a demolition of twin tower, there is a strong violation of the physical law of nature my friend. So, there you have the conclusion. Of course, the government always has experts that can misguide the people mind.
Trump dug a hole for himself and threatened to jump in if China didn’t make a quick deal. China said ok, jump.
Bankrupting American farmers will make the land cheaper for the Chinese to acquire. It’s like the biggest shark in the world is going senile and all the little porpoises are ganging up to finish it off. There is blood in the water.
Bolton and Pompeo are President of USA. The prescribe and decides for Trump. Spokesman fat fuck Trump make only official announcement and sign of deals on behalf of President cockroach Bolton and gay Pompeo.Trump is first ever terribly crazy official full of lies.No wonder Putin get directives from low level USA Pompeo and Bolton.
yeah the piece de resistance,dunny the dunce or don donny, is just a showpiece while the the real powers are held and executed by two or three people that, for the world’s best, would be best seen swinging from a lamppost. but since the rest of the world hunkers down and stays mum, the neo-nazis in washington dc can do whatever they want.
bad move by D.T.
25% tariff on chinese fish, clothing and shoes.
more naked hungry murikans on the streets.
too painful to behold.
did you know that murika gets 40+% of its fruits and veggies imported from mexico?
what do these exceptional beings do for themselves these days?
I think You should see the whole picture in stead of reducing it to fruit and vegetables from Mexico.
Facts are USA imports more then it exports. Thats one of their biggest problems.
For the time being and some decades USA treat themselves bad making a smaller middle class, and as we can see import of cheep laybor from mainly south only make low tech solutions,where the poor low educated making godd tempoary solutions and no long term ones.
They have to educate more people better and see that as an investmentent. For many years it has been theopposit having no defence shield for too many.
Only one change is visble, which is inspration by Sanders according to the Scandinavian solutions according free school, education, medical care and more independency for students as well as retired get a little better pension.
USA as well as ME dont understand systems like that, because they are raised different and the context is too far from that.
We see the same for energy. Too many outiside USA only see Trump and his oil. But I do have hopes, because USA actually in ost states invest in wind and solar power making cleaner and cheeper energy as well as are able to reduce by much better metods.
“Only one change is visble, which is inspration by Sanders according to the Scandinavian solutions according free school, education, medical care and more independency for students as well as retired get a little better pension.”
I think you should see the whole picture instead of reducing it to Bernie Sanders.
B.S. is not electable for the simple reason that he is viewed as a “socialist” (whatever that is these days :-) ) In addition to this negative image as a “socialist” he has been implicated in enough dirt to keep him out of office.
It is moves such as these that will keep B.S. out of the running (and there are others): ” Bernie & AOC Declare War On The Poor With Anti-Credit-Card Law”
https://mises.org/power-market/bernie-and-ocasio-cortez-declare-war-poor-anti-credit-card-law
This is not the kind of friendly press B.S. needs when the FSA depends on plastic to survive. And being linked with AOC is definitely not a plus.
By your own admission; “SA as well as ME dont understand systems like that” and there is no reason for them to do so. They are structured differently. As I understand it the Swedish economy depends on high taxes (almost 50% of GDP??) to provide all the freebies to its people. You may wish to spend a bit of time taking a look at the tax structure in the u.s. and just how many people really pay taxes and where that money goes. (clue: look at the military expenditures) Also the u.s. is not structured philosophically the same as europe. It does not, for the most part, have a supportive social structure. The Swedes, for example have tried to cope, unsuccessfully for the most part, with the influx of Madame Merkel’s refugees. In the u.s., they cannot cope with their own homeless, mentally ill, drugged peoples. Spend some time looking at the homeless camps in Los Angeles and San Francisco (YouTube)
It’s nice that you have “hopes.” I hope you are not too disappointed when your hopes are not realized. :-)
Yes education is the key, but those in power don’t want to educate the people, because an educated people would turn against the government, like they did in the 1960’s about the Vietnam war.
You can trace the lowering education standard in America from that time, and I believe it was done deliberately to make the American people easier to control.
Keep them stupid and stoned on drugs and any people are easy to enslave.
Long term the US will end up like India, a fabulously wealthy upper class and an extremely poor peasant class.