With recrudescence breaking out with North Korea Trump lost his Nobel Prize and his one foreign policy achievement. That leaves him the American economy and that is the biggest prize of all.
Unemployment lower than ever, robust GDP growth, no inflation, stock market all time highs, prosperity oozing from every orifice. Smoot-Hawley was the third rail of economics and Trump has smote Smoot, not only touching the third rail but grabbing it right by the ... He pulled out of TPP, redid NAFTA and has been tariffing China continuously. Each of Trump’s actions was predicted by consensus to be hugely damaging to the American economy. Together, they were the Apocalypse. None of it happened.
He has now levied tariffs of $200 billion on imports from China. The American stock market did what it has done each of the times Trump has smooted: hiccuped one day and then rebounded the very next. The Chinese responded with levies of $60 billion on U.S. goods. Why the lack of Chinese reciprocity? On accounta they’ve run out of U.S. imports to whack! The trade disparity between the two countries is so one-sided that Trump could go on levying and the Chinese could not counter. That is Trump’s trump card. The conventional wisdom is that this trade war will cause "pain on all sides." That in fact was exactly what Trump's economic adviser Larry Kudlow said just today. And there will be. But the pain will be immensely one-sided. Chinese will be in agony, Americans will pay ~$800 more. Eh.
Trump has put China in a dangerous position. Chinese politics is immune to democracy’s laws but not to economics’ laws. The CPC's legitimacy is entirely dependent upon continuation of its unnatural economic growth. No country in history has ever defied the laws of economic gravity as China has the last 40 years. Forty years of continuous growth, explosive growth. No "corrections," no long-lasting recessions. How is that possible? The trade imbalance with the largest economy, the U.S., peut etre?
Trump has put Xi Jinping in a no-win position. Xi is the most powerful Chinese Maximum Leader since Mao Zedong. Giving in to Trump puts him at risk. Chinese have loonngg memories. "Concessions," as were made to foreign powers at the beginning of the 20th century are the third rail of Chinese foreign policy. "China has finally stood up" Mao said on the founding of the state. Now China has to sit back down? Ooh. Not giving in to Trump however threatens the economic foundation of the state's legitimacy. This is gonna hurt Chinese! It's not gonna hurt Trump.
Unemployment lower than ever, robust GDP growth, no inflation, stock market all time highs, prosperity oozing from every orifice. Smoot-Hawley was the third rail of economics and Trump has smote Smoot, not only touching the third rail but grabbing it right by the ... He pulled out of TPP, redid NAFTA and has been tariffing China continuously. Each of Trump’s actions was predicted by consensus to be hugely damaging to the American economy. Together, they were the Apocalypse. None of it happened.
He has now levied tariffs of $200 billion on imports from China. The American stock market did what it has done each of the times Trump has smooted: hiccuped one day and then rebounded the very next. The Chinese responded with levies of $60 billion on U.S. goods. Why the lack of Chinese reciprocity? On accounta they’ve run out of U.S. imports to whack! The trade disparity between the two countries is so one-sided that Trump could go on levying and the Chinese could not counter. That is Trump’s trump card. The conventional wisdom is that this trade war will cause "pain on all sides." That in fact was exactly what Trump's economic adviser Larry Kudlow said just today. And there will be. But the pain will be immensely one-sided. Chinese will be in agony, Americans will pay ~$800 more. Eh.
Trump has put China in a dangerous position. Chinese politics is immune to democracy’s laws but not to economics’ laws. The CPC's legitimacy is entirely dependent upon continuation of its unnatural economic growth. No country in history has ever defied the laws of economic gravity as China has the last 40 years. Forty years of continuous growth, explosive growth. No "corrections," no long-lasting recessions. How is that possible? The trade imbalance with the largest economy, the U.S., peut etre?
Trump has put Xi Jinping in a no-win position. Xi is the most powerful Chinese Maximum Leader since Mao Zedong. Giving in to Trump puts him at risk. Chinese have loonngg memories. "Concessions," as were made to foreign powers at the beginning of the 20th century are the third rail of Chinese foreign policy. "China has finally stood up" Mao said on the founding of the state. Now China has to sit back down? Ooh. Not giving in to Trump however threatens the economic foundation of the state's legitimacy. This is gonna hurt Chinese! It's not gonna hurt Trump.
