There is lot of “hopium” amongst administration, investors. The above 3 nations citizens have endured a lot and more resilient. I am not sure US citizens can handle a sustained 5% inflation let alone 10% inflation.
At the end of the day you need the things those countries manufacture.
SK responds to tariffs with even more domestic subsidies for auto manufactures and tax incentives for their own citizens to buy domestic:
Bibi is happier with his barrel than the Gazans are.
It will be deflation. Please study on the topic. Econ.
1890
1921
1922
1929
Our tariff wars. Come back informed.
Today’s imaginary excuse, “Trump is resetting global trade”.
The problem is the means of production will leave the US when corporate taxes fall to 15%.
I’ma go way out here and predict something (with low confidence) that should be on the policy-makers’ radar:
China takes Taiwan.
Far fetched? Maybe. I recall that when FDR embargoed fuel deliveries to Japan in the summer of 1941, their response was a little thing called “Pearl Harbor.” Yes, the Japanese had been rehearsing such a scenario for years (and not to put too fine a point on it, but China has been rehearsing Taiwan for a long time too, most recently last summer), built it was the sudden imposition of the fuel embargo that brought them to action.
I now remind that the Chinese economy is weak (hardly on the ropes, however) and taking Taiwan achieves several objectives for the mainland leadership.
First: distraction. It does what Adolph (you-know-who) and Hirohito did at the outset of their wars: it puts the home populace in a different mindset, one of nationalistic furor.
Second: it’s a major blow to the US, not only in consumer products (chips) but in military preparedness, as both segments rely on the abundant, and nearly monopolistic output of Taiwan in advanced chip production.
Third: it’s achievable, at least in theory. China is 90 miles from Taiwan. The US is 7,000 miles away. Not that it makes it impossible, just difficult for resupply and support. China has a million man army, a carrier task force has a few thousand marines available and little in the way of “landing” support.
Fourth: it follows China’s already announced retaliation of putting rare earths and other resources (again, chips and chip fabs) necessary for the American economy at even further remove.
Fifth: the cultural realization of “One China” finally becomes reality, a policy slogan that the leadership there has been echoing for decades.
I can see some people in Xi’s government arguing for “now is the time”, since it has been on their radar for years and several leaked sources have pointed to 2027 as a propitious time anyway, when the Chinese Navy will be up to full capacity for such an adventure.
So probably it doesn’t happen - but maybe it does. You think you’ve seen stock gyrations lately? You ain’t seen nothing yet.
That would also apply to China; invasion is not a risk-free strategy.
DB2
As the Argentine junta found out.
Steve
Possible but stupid. The world would make economic warfare upon China. The world nations would target stopping oil from reaching China. China’s economy would come to a screeching halt.
What is the strategic value of Taiwan to USA. High end chip fabrication. That is moving to the USA. The first US fabrication facility is near completion. I think it likely more will follow. TSM has read the tea leaves. I expect top executives of TSM have their personal assets in safe locations-USA, EU,Japan. Executive jets fueled and ready to go for them and key employees. Taiwan fabrication facilities wired with demolitions so that it will China years to figure out and rebuild them.
Hard choice. Being angry at China for doing something which doesn’t affect them in the slightest, or being angry at the US for causing their economies to implode.
China imports oil from Russia, Saudi Arabia, Iraq, the United Arab Emirates, and Oman. Which ones of those would care, again?
And if that happens, who is affect more, the US or China, given that high end chips are embargoed to China already?
OK, I’m not saying it will happen, I’m saying I can lay out a plausible scenario by which advisors to Xi can make the case “might as well be now” rather than in a couple more years.
Is it a risk? OF COURSE. So was Pearl Harbor, the Iraq War, the Iraq War II, and the Falklands. War is always a risk. There’s always someone who loses. It’s whether the xxxx-measuring contest gets so far along that the people in charge are willing to take the risk.
EU import high end chip Taiwan too. Taiwan is the hub of high end chips.
The US can warn Russia, Saudi Arabia, Iraq, the United Arab Emirates, and Oman that their tankers going to China are subject to US submarine attack.
Doubtful will go nuclear to protect that trade.
TMC is already migrating production to the USA.
Yes, I know. You think the EU is going to declare war on China in response?
Sure, we’re going to submarine attack Russian tankers, and those from Saudi Arabia et al. Not a very likely response, but then in times of war you just never know. At least as likely that those countries would embargo oil deliveries to us (and yes, tho we are a net energy exporter it’s because of natural gas, which doesn’t run a lot of cars here, so and oil embargo would hammer us pretty well.)
The US is a net exporter of petroleum products (crude oil, petroleum products and hydrocarbon gas liquids). LNG is a separate category (of which we are also a net exporter).
DB2
If it’s a security argument than why would you negotiate? You should just put the tariffs on and make sure all of the products that are a security concern come back to the United States. If he negotiates on them then we know it has nothing to do with security.
Nah. They are unneeded.
Maybe because this will be the communist party’s last chance. The US tariffs may cause the fall of the party.
The fall of China because of the tariffs may mean it is impossible later.
Report on NPR China is happier and more confident right now. Their plan is to invest heavily at home on internal consumption.
I doubt much will be affordable to the Chinese government next year. Meaning military plans may fall apart.
I think China is at the apex of her military power right now. It is built on their trade arrangements with the US.
Currently China tariff on US goods 84%. US tariff on China goods 125%
Trade basically stops.
US received $463 billion in goods in 2024.
China received $165 billion in goods in 2024.
Which nation is hurt more?
The doofussness of these tariff policies are as likely to damage the US as China. We export about $150B to China every year, and you can be sure that Xi will snap that shut as his exports to us decline.
So what will they do? Probably import a lot of that stuff from Europe or Australia, who do NOT have tariffs and who are not engaging in a ridiculous t!t-for-tat pushing match as we are.
We will lose most, if not all of that $150B in exports, but others will pick it up - because we are isolating ourselves from everyone, but the EU, Australia, China, and the rest are not isolating themselves from anyone .
I wonder what American farmers are going to do with all those soybeans and all that wheat that they mused to sell to China?
Meanwhile China will probably roll along, perhaps hurt a bit, but then they’ve been through far worse over the lifetimes of those in that country today, so I expect they’ll survive, especially when their state media blames it all (correctly or not) on the unstable genius atop our government.
We don’t NEED NO STINKING DOLLARS!
https://www.news.com.au/finance/markets/world-markets/brazil-china-ditch-us-dollar-for-trade-payments-favour-yuan/news-story/682a517c37ba14f306e65ad0e83f6307
Brazil has just cut a deal with China to ditch the US dollar when paying each other for trade goods. It’s the latest victory in Beijing’s long-term drive to stomp on the greenback and establish the yuan as the dominant international currency.
