Supply chains everywhere are disrupted. US farmers will be bailed out, again.
When I say most trade will stop, I mean with China. If global trade stops we will be in a severe depression.
China Takes Aim at U.S. Companies
Trump did not expect any country to fully retaliate or didn’t care. He soon will as China Has Readied a Trade-War Arsenal That Takes Aim at U.S. Companies
On Wednesday, China said it would increase tariffs on all U.S. imports to 84%, a response to new U.S. tariffs on Chinese imports of 104% that went into effect at midnight. It also added six U.S. companies including defense and aerospace-related firms Shield AI and Sierra Nevada to a trade blacklist, and imposed export controls on a dozen American companies including manufacturer American Photonics and BRINC Drones.
While Trump has focused on tariffs as his trade weapon of choice, China’s strategy goes well beyond imposing its own levies, relying on the lure of the Chinese market for U.S. companies. A central thread running through its calculus is how to inflict hardship on companies that bank on their ties with the world’s second-largest economy.
Tools that Beijing has already used and is likely to expand include export controls of critical materials American companies use to make chips and defense-related products, regulatory investigations designed to intimidate and penalize U.S. companies, and blacklists intended to bar U.S. businesses from selling to China. In addition, authorities are preparing new ways to pressure American companies to give up their crown jewels—intellectual property—or lose access to the Chinese market.
The toolbox underscores leader Xi Jinping’s capacity to engage in a prolonged economic warfare with the U.S. As both capitals appear to move toward decoupling, it also highlights the ever-rising risks for U.S. companies operating or investing in China, or simply trading with the country.
“China has systematically put together a new arsenal of tools that’s intended to minimize the cost to China and maximize the pain on the U.S.,” said Evan Medeiros, a former senior national-security official in the Obama administration and now a professor at Georgetown University. “They’re prepared in a way that gives them an asymmetric advantage in the trade war.”
China’s government and state media have taken a defiant tone, with the Commerce Ministry saying, “If the U.S. insists on its own way, China will fight to the end.”
The 104% tariff on all Chinese imports that Trump has now imposed in his second term will stack on top of earlier tariffs already in place, bringing the total average tariff rate on China to nearly 125%.
There are some options Beijing will for now be less likely to resort to as the costs to China itself could be high. That includes sharply devaluing the yuan or aggressively selling down its holdings of U.S. Treasurys. Both moves could destabilize China’s own financial market and hurt its strategic goal of bolstering trade relations with other countries.
A new report commissioned by the U.S. Chamber of Commerce Foundation found that most of the roughly 200 American companies surveyed in the past couple of years identify China as their No. 1 source of geopolitical risk
In response to Trump’s recent tariff actions, China last week launched an antitrust probe into the China operations of DuPont, which relied on the mainland and Hong Kong for 19% of its revenue last year, without giving much explanation.
Wild Ride in Futures
I watched the futures gyrate wildly last night with equities swinging hundreds of points up and down in minutes. Bonds did the same thing.
I will comment more on bonds later today with some charts.
The implications are not pretty, but the bond gyrations have nothing to do with China dumping Treasuries as many speculated on X.
Meanwhile, please note that gold is up $115 as I type. Gold is at $3,104 and West Texas Intermediate Crude (WTIC) oil is down another $2 to $57.39. Wow to both.
The Clueless Want Trump to Hike Tariffs on China Again
I failed to bookmark the link but a widely followed person on X wants Trump to hike tariffs on China to 400 percent.
It would not matter. We are already at the point trade with China will cease or nearly cease. Another 4,000 percent hike would not do much.
What About Farmers?
Trump is already discussing aid to farmers. Here is how it works.
Trump taxes US consumers via tariffs. Trump will then pay farmers to stop complaining.
In short, US consumers are taxed and the money is given to farmers.
That is exactly what happened in 2018 and it is going to happen again.
We call this winning.
The Nuclear Option
The alleged nuclear option of China dumping treasuries is nonsense.
China’s true nuclear option would be an total export ban on rare earth minerals the world needs to make cell phones, microchips, wind turbines, and missile guidance systems.
Understanding Rare Earths
At present China produces 60 percent of the world’s rare earths but processes nearly 90 percent, which means that it is importing rare earths from other countries and processing them. This has given China a near monopoly.
According to the United States Geological Survey, China has been supplying 54 percent of the germanium used by the United States, a material used in infrared technology and fiber optics.
The United States has not mined its own gallium, used in semiconductors, since 1987. Japan supplies 26 percent of American imports of gallium, China 21 percent and Germany 19 percent, along with several smaller suppliers.
Antimony (Sb), a critical metalloid, is a key element of the American war machine, essential for communication equipment, night vision goggles, explosives, ammunition, nuclear weapons, submarines, warships, optics, laser sighting and more, according to U.S. Army Major General (retired) James Marks.
China controls nearly 50% of the global antimony supply.
Related Posts
November 21, 2024: China’s Puts Export Curbs on Minerals US Needs for Weapons and Technology
In a warning shot to the Trump administration, China tightens export controls on some dual-use minerals.
December 3, 2024: China Halts Rare Exports Used by US Technology Companies and the Military
This is China’s advance salvo at Trump tariffs. It comes one day after the Biden administration expanded curbs on the sale of advanced American technology to China.
And on April 4, 2025 China retaliated by restricting exports of seven types of rare earths.
China can easily block rare earth exports to the world. If that happens, Trump will panic.
We should not be in this position, but we are.
“Mish would rather we keep living with the Devil rather than perform the exorcism”
False and I ban people for misstating my position if I think it is on purpose or they should know better.
I have commented several times recently citing both chips and rare earths that I fully support breaking China grip.
Moreover I proposed subsidies to do so. I commented that one of the few things Biden did right was to get Taiwan to build chips in the US.
Lol. Everyone got played and trump gets China. Mission accomplished. Thank you all for playing along!
Let’s see how well our nation does without China’s rare earth metals
Let’s see how well your nation does in a war with a country that controls critical parts of its supply chain! Brazil, India, Australia, Vietnam, Greenland, as well as the US have REMs. Brazil has 50% of China’s REMs
TRUMP BLINKED!
The worlds grownups and the bond market bitch slapped trump into the corner and let him know that they were not going to play along. Many other nations retaliated and trump has to give them a pass to save face.
Love the hollow over-done spin that this is a big win!
Trusting trump is not a reasonable or rational position to take as nations move forward. Trump breaks the deals he negotiates and the casino still goes broke.
It’s funny that trump did not have the courage to face the nation. Methinks his diapers were full!
Or another version is that trump pissed in the wind and got it all over his face!
All my friends and I predicted Trump would do just this. Relent when he sees the devastation his capricious ways are causing, back down tariffs, and claim a victory that doesn’t exist in any way, shape or form. All that’s left is for his mewling cultists to believe he won everything over everyone, which most of them will do without giving it any independent thought. Just watch.
Watch your mewling cultists constantly frothing at the mouth clutching at any straw to attack your favourite bogeyman. From the outside looking in, none of your fellow-cultists’ narratives have any traction, you are in your echo chamber.
I don’t think the “capitulation” narrative is working, certainly not in Asia.
I don’t know what it was. What was the hook to get Taiwan to build chips here?
If the Exorcism kills you, then maybe living with the Devil is the way to go. Don’t know…..
China is just telling if you’re nice and responsible everyone has a place in the world.
The problem is Mish, that you don’t understand what is and what isn’t inflation; and you have been flailing about and ranting and raving about tariffs and exposing yourself as being yet more clueless, and then you go around calling other people clowns – making you sound like an angry drunken tramp on a park bench.
price rises are not inflation. inflation only happens when there is actual growth and actual growth of actual credit by banks issuing loans at a rate faster than growth.
for some unknown reason you seem to think that putting tariffs on foreign imports results in “inflation”, but it doesn’t. The prices might go up, but that’s not inflation, and especially not when sales collapse; and you also think subsidies are a good idea too?
What is also bemusing is that you expel a lot of heated air about what you think is the affect on US consumers by US tariffs on Chinese goods, but not the other way round. You seem to have missed the point that for demand and thus consumers to exist, they have to have disposable income and jobs in the first place.
importing cheap tat from Asia, and buying it on credit cards and other debt products because employment has been exported to Asia for a slightly better profit margin, does not result in a growth of consumers in either the US/West or China/Asia, the profits in this trade are all financialised and mopped up as cream by fat cats on both sides – if there are any – because without sales, then that doesn’t stack up either.
American/Western consumers need jobs to have the money to buy these imports from China/Asia… and if you export all the jobs, and live off debt, you end up in ever decreasing circles… and the evidence for that is in the source end actually – China has been pumping dry on debt for the past 10 years, without the RoI, and creating debt bubbles in the process, that are now cavitating the Chinese economy – self-evidently, the status quo is dependent on debt on both sides – China / USA.
Liz Truss resigned after bond market rout.
What’s about Trump?
That was not to do with a bond market rout at all, go and check your lines.
I really don’t know much about the White House people but… are they a bit, uh, shall we say… mental?
CEA Chair Stephen Miran posts on the official WH website a helpful suggestion for “the World” from Afghanistan to Zimbabwe: “they could simply write checks to Treasury that help us finance global public goods.” Yes, because global domination and 800 military bases is something everyone can chip in for. A GoFundMe is next?
Keep up the great work Mish!
Been reading you for quite awhile – I think this your first “D” word forecast.
China’s true nuclear option would be an total export ban on rare earth minerals the world needs to make cell phones, microchips, wind turbines, and missile guidance systems.
=====
i think nuclear would be CUT OFF USA COMPANIES from china market, biggest market in world. cars/computers/cell phones/etc
you cant beat raw numbers, 1.4 bln against 350 mil
middle class in CHINA is bigger than whole USA adult ppl.
number of millionaires are comparable.
check out new cars sales .
alx
I assume both are options.
So China produces about 40M T on REMs it’s about 50% of the world supply.
Brazil has about 20M T, Australia and India each have about 7M T, Vietnam, Denmark, and the USA have about 2M T …Russia has about 4M T…
Back to questions. If China is at the moment cost prohibitive, where do we find replacements for product? If China is the only one left out in this round of musical chairs and its product needs to be replaced, or at least a large chunk because reshoring takes time, don’t the 70 et al countries who get a 10% toll make more money by picking up market share?
many countries can replace China, this notion that China is essential to the world economy is one the CCP have relied on for years, but it’s a spent narrative now, and there are several other options for a diversified friendlier set of arrangments.
Every country but China can get 10%. Couldn’t happen to a nice bunch of communists lololol.
Enjoy having no Chinese rare earths. They are not eminently fungible, BTW.
You can have Brazilian rare earths, China only has half of the world supply.
I’m reading that as 7 weeks of wiggle room for Chinese exporters. What say you?
CSMS # 64649265 – GUIDANCE – Reciprocal Tariffs, April 5, 2025 Effective Date
EXCEPTIONS
9903.01.28: Articles the product of any country that were (1) loaded onto a vessel at the port of loading and in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. EDT on April 5, 2025, AND (2) are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EDT on April 5, 2025.
To prevent importers from abusing the exception for goods that were in transit before April 5, 2025 when it is no longer realistic due to the passage of time, CBP will permit heading 9903.01.28 to be declared only for goods that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EDT on April 5, 2025, and before 12:01 a.m. EDT on May 27, 2025.
https://content.govdelivery.com/bulletins/gd/USDHSCBP-3da7831?wgt_ref=USDHSCBP_WIDGET_2
Mish, did you just take control of the White House like Alexander Haig?
At this point, you really have to wonder if this back-n-forth economic policy wrangling is really just a way of make insane trading profits. That seems to be the only way it makes some kind of logical sense.
Fair is fair. If Trump can unilaterally deny specific colleges federal funding and issue EOs against specific law firms he doesn’t like, etc., I look forward to the quid pro quo when Democrats get back in control.
Every specific family member and close associate of Trump should be investigated for insider trading after the fact. When did they buy specific stocks and when did Trump make specific public policy statements affecting those companies’ stock prices?
People know he changes his mind often. If you stayed short after 20% down you deserve to lose.
Changing his mind often? Or at exactly the right moment after a phone call to his children and their friends?
That will be left up to a jury of his peers. Like so many other autocrats that knew all the answers.
Let Congress do its job!
For what?
All are pardoned.
Which autocrats are you thinking of? Biden? Merkel? Macron? Xi?
“You got those OTM SOXL weekly 10 calls loaded, Eric?”
“Yeah Daddy I did it, I’m so proud of me!”
“Okay here goes the tariff backdown”
Is no one else amazed at the speed of these moves? Almost +7% ES in 9 minutes. Insane, fiber optic algo madness. Market makers cover, longs jump in, short players get fried and dump, in less than the blink of an eye. At least we have Terminator style AI to look forward to …
SMH 13% LOL just a routine day in the market
The docking fee for Chinese ship just went up about 84%.
Not the ones that have been diverted to new markets in Europe, Brazil and many other nations.
playing portside whack-a-mole – it’s not like they don’t know where the shadow fleets are roaming.
So global trade breaks down. What happens to all those dollars sloshing around globally that are no longer needed? Do they stay where they are, buried, Pablo Escobar style, in fields, or do they somehow make their way back to the USA? Influx of dollars into the USA without the same level of economic activity presumably will cause inflation…..or eventually deflation as local businesses shut shop?
We go back to the US printing less than others and all seeking safe haven in the dollar.
the 13T euroDollars around the world are all time-limited, and expire if not traded.
The 3T USD in cash are mostly in the US, along with the 17+T of eUSD that exists mostly within the US controlled domestic financial system and its external outposts.
Lol got up to make a sammich. Small long in MES. Boom 300 pts. So stupid. But I’ll take it, better lucky than smart. What is revealed is that this entire exercise was aimed all along at Chairman Mao who fell for it hook, line and sinker.
It’s all tarriffic!
I’m firmly against this 90 day delay. Max leverage is lost. This is a mistake
Face it… Trump blinked after being bitch slapped into the corner where he belongs.
Trump ran into a wall of resistance from the entire global business and political community.and few will trust him in the future.
Good to see the bully stuck in the corner wearing his dunce hat!
Bravo global community!
You sound like a mentally ill Chinese communist party bot.
I dunno, I mean, he can change his mind next week and throw a bit more disruption in for the popcorn traders.
Trump cracked and blinked first.
He had no support from any nation and China even told him to stuff it where the sun doesn’t shine.
Such a loser and now we watch him squirm in his full diaper!
LOL!
You may need to change your tighty whities.
All good on my side! The idiot in chief blinked and no one will trust any deal he makes! Funny stuff that the Chinese played the bond market auction perfectly and has gained market share from the global community.
Laughing out loud as they say ;-)))))))
Trump remains the dunce in the corner and only a fool would trust him.
You mean you can’t afford new nappies, so you are just filling your socks now as it runs down your legs?
I get the sick feeling that this will backfire on us badly. China can take the pain. I believe we are 15% of their export market. Their people have no choice. How did Tiennaman square work out for the students? We suppress our own students (and Universities) when they try protesting the Gaza Genocide. Kind of like the pot calling the kettle black. I don’t think China will back down -ever. Most of the world backs them and has their own tariffs that anger them. Trump bragging today that so many countries are now kissing his ass does not help. That China will fold is likely to be Trump’s biggest misjudgment. Now watch if Trump bombs Iran. I don’t think he will do it-but he might. Ms. Adelson is likely calling in the chips. China may retaliate by invading Taiwan. Trump is playing a dangerous game of chicken. What if either side blinks. The collision could be catastrophic.
Why do so many in the tread think that China is the same as Mao’s great march? Not the case now.
China most definitely cannot take the pain… they are being crushed by this.
90 day pause. All this nashing of teeth and doomerism for nothing
Many of us don’t think this teeth-gnashing is for nothing.
Spending and taxing (including tariffs) should be the purview of Congress. Trump has the majority of acolytes in both. Why not go that route?
It’s not doomerism to be concerned that an autocrat seems to be making significant headway within our society. Luckily for us, Trump caved again. Maybe somebody showed up with his favorite dessert this afternoon?
Great Depression comparisons were silly. I didn’t hear you talk about spending authority when Biden impaled the economy with inflation through debt forgivenness up the ass as well as free money in all directions. Glad you found religion with Trump.
What? Are you delusional today? Is it because your Captain showed his true made-for-TV negotiating skills?
Who mentioned the Great Depression at all?
And what free money did Biden issue without Congressional approval and a vote? Because unlike you, yes I want all Presidents (Democrat and Republican) to stay in their lane
You mean the autocrat Biden? Obama? Clinton? Pelosi? Soros? Which one?
Some of us feel that diddling the stock market for Trump’s personal self-enrichment is a bad thing. I see you welcome it. You can fool yourself, or you can admit this was likely all about Trump front-running his news with his equity positions, or perhaps deep OTM calls that have now already been cashed for tens of millions. Or you can laughably claim he is “Above that sort of monkey business”
Lord Douchnozzle just can’t stop fawning attention on himself. He doesn’t care if the world explodes today or next week, so long as all the attention is on him. That’s what you get for a childhood of emotional neglect.
These reliance’s on China must be broken one way or another. Mish would rather we keep living with the Devil rather than perform the exorcism, just because the exorcism promises to be messy. But the longer we wait, the more likely it is we will find ourselves in hell, and irreversibly so.
No one wants to take the pain or do what’s necessary. Particularly Baby Boomers.
Imagine not wanting to give up your standard of living in life’s last chapter.
LMAO after destroying it for all the generations after you you. Yep, you get it alright
I will cut you slack exactly once.
I have commented several times recently citing both chips and rare earths that I fully support breaking China grip.
Moreover I proposed subsidies to do so. I commented that one of the few things Biden did right was to get Taiwan to build chips in the US.
So apologize now for brutally misstating my position, and don’t do it again.
Friend of the Devil is a pretty good tune though!
This could have been a limited sectoral spat between two biggest economies, but Trump pizzing off 150 countries plus the penguins, I wonder who is rooting for USA?
Anyone who doesn’t want to spend the next few decades kowtowing to Xi and Chinese censorship.
You really are easily manipulated. Have you looked into China’s population demographics, their ghost cities, vacant AI data centers, and best of all, how private citizens invest their wealth into real estate “ownership?”
We don’t need to sink their ship, they’ve already removed their entire hull.
The lure of Chinese markets … its been a dream from the time of Oliver Perry. A dream that never really has panned out. Copy, steal, undercut pricing, export. Its worked for the oligarchy though.
Economy for Wall Street correct. Now the screaching and whining while things are still up 92% over the last 5 years. Disgusting. Popping these asset bubbles warms the heart
Yeah, I hope all those regular Joes lose their chance to retire soon and/or lose their home like they did in the Great Recession. Stupid regular Joes; they should have known their asset structures better /s
If you are leveraged to the hilt that’s not too wise. Wasn’t in the fake bubbles of 2001 or 2008. That we are supposed to continue bubbles is a strange thought. We are supposed to encourage people into the casino?
Shortly we are going to be able to answer the question of which country needs the other the least.
It’s going to be fascinating to watch even if there is a lot of short term pain until we get the answer. At that point the US will retain it’s position as world leader or China will assume it.
The leader of the loser will be politically dead (ie basically sidelined in Trumps case or removed in Xis case).
300 billion dollar trade deficit with China. Not sure how this is good for them. But we’ll see.
As Mish has reported, this is probably not good for any country generally. But Trump said I’m putting extra tariffs on you and you will NOT put more on us. And China said no.
Who knows why for sure China reacted this way with the billions we send there each year? But if/when Trump reneges, I’d say China’s bluff worked and they can expect alot of extra US consumer sales and FDI for the near- and medium-term future. Maybe that’s why they are going for it
Maybe.
Who said it was good for anybody?
The blatant stupidity of the economically clueless is there is a winner and loser in trade.
You insist on being clueless. I can’t figure out if you are really that dense or if you just have a bad case of TDS Type II.
Help us out. Is it both?
Where did I say it was good for anyone? This is game theory. The status quo needs to change. We can disagree on how its supposed to change. Not that it needs changing.
You take disagreement as TDS rather than informed disagreement. I’ve said many times Trump is a vessel, nothing more or less. I don’t get stuck on him as anything else.
Maximum disruption the better according to trump.