China is going all in on exports to revive growth led by EVs. Trump vows to strike back with 60 percent tariffs.
Accelerated Global Trade War
The Wall Street Journal comments China Is Starting a New Trade War.
China is cranking up its massive export machine again, and this time there’s nowhere for competitors to hide.
A Massachusetts startup called CubicPV bet on silicon wafers, a high-tech component in solar panels. Buoyed by President Biden’s climate legislation enacted two years ago, with billions of dollars in tax credits and government loans, CubicPV announced plans in late 2022 for a $1.4 billion wafer plant in Texas.
Since then, China has nearly doubled its output of silicon wafers, way more than it needs. The extra wafers had to go somewhere—and they went overseas, pushing prices down by 70%. CubicPV had to halt its production plan early this year, putting engineers and other employees out of work, citing “a distorted market as a result of China’s overcapacity.”
The European Union’s recent decision to impose tariffs on imported Chinese electric vehicles is only the latest sign of deepening tensions. The U.S. earlier this year hiked levies on Chinese steel, aluminum, EVs, solar cells and other products. Turkey has jacked up duties on Chinese EVs, while Pakistan raised tariffs on Chinese stationery and rubber.
Chinese leader Xi Jinping ordered officials to double down on the country’s state-led manufacturing model, with billions of dollars in fresh subsidies and credit. He used a slogan to make sure officials got the message: “Establish the new before breaking the old,” or xian li hou po in Chinese.
China has added capacity to produce some 40 million vehicles a year, even though it sells only around 22 million at home. It’s on track to make around 750 gigawatts of solar cells this year, despite only needing 220 gigawatts domestically in 2023. And it is expected to account for 80% of the world’s new supply this year in basic chemicals such as ethylene and propylene, used to make garbage bags, toys and cosmetics—even though prices in China have been falling for 19 months, a sign of oversupply.
The International Trade Commission, a federal agency that analyzes trade issues, in June gave its initial go-ahead to an antidumping petition backed by American solar manufacturers who allege solar cells and modules made by Chinese companies are sold in the U.S. for below market value and unfairly subsidized.
Other parts of the world are bearing more of the brunt. European automakers have axed more than 10,000 jobs as more Chinese EVs arrive. Antonello Ciotti, chairman of PET Europe, a trade association for European makers of chemicals used in polyester fibers for clothing and recyclable containers, said European PET producers shed hundreds of jobs as firms slashed costs and production to deal with Chinese imports. The EU late last year imposed antidumping duties on certain imports of Chinese PET.
“Everybody makes stuff in China,” said Joerg Wuttke, former president of the European Chamber of Commerce in China and now a partner at Washington consulting firm DGA Group. “But nobody makes money.”
Two Guiding Principles
Two principles have guided Xi’s thinking, Chinese policy advisers say. The first is that China must build an all-encompassing industrial supply chain that can keep the domestic economy running in the event of severe sanctions by the U.S. and other Western countries. In the top leader’s views, advisers say, industrial security sits at the core of China’s stability as tensions with the developed world rise.
The second is a deep-rooted philosophical objection to U.S.-style consumption, which Xi sees as wasteful.
China’s first fear is well founded in reality. US sanctions on chips and AI technology have forced China to go it alone.
It’s a US mistake to think it can cut off China from leading technology.
Should the US succeed, China would and could cut the supply or rare earth minerals the US needs to make phones, missile guidance systems, EVs, wind turbines, and advanced chips.
What About Dumping?
China is on track to make around 750 gigawatts of solar cells this year, despite only needing 220 gigawatts domestically in 2023.
But the US grows more corn and soybeans than it can eat.
If every country produced only what it could consume, global trade would be zero.
China has access to minerals needed to make solar panels and batteries for EVs. To meet energy goals, the US should be thrilled to get cheap solar panels.
But to save a few hundred jobs (that vanished anyway), Biden upped tariffs and mandated installers use US-made panels.
Another Green Energy Company Declares Bankruptcy
On August 10, I commented Another Green Energy Company Declares Bankruptcy, Thank Biden’s Tariffs
The attempt to force production of solar panels in the US resulted in prices so high that few wanted them.
No only did production vanish so did installation jobs.
Eh Tu Canada?
Reuters reports Canada to Impose 100% Tariff on Chinese EVs, Including Teslas
Canada, following the lead of the United States and European Union, said on Monday it will impose a 100% tariff on imports of Chinese electric vehicles and announced a 25% tariff on imported steel and aluminum from China.
“What is important about this is we’re doing it in alignment and in parallel with other economies around the world,” Trudeau said on the sidelines of a three-day closed-door cabinet meeting in Halifax, Nova Scotia.
Undaunted, China is accelerating production of EVs.
Ford Cancels Plans for Electric SUV, Expects a $1.9 Billion Loss
Please note Ford Cancels Plans for Electric SUV, Expects a $1.9 Billion Loss
Say goodbye to a vehicle that never should have been conceived in the first place. Customers don’t want it.
Huge losses are exactly what one should expect when government rather than customers drive business decisions.
Despite huge subsidies, Ford still cannot make ends meet on EVs.
Yet, due to government coercion, Ford is forced to try, try, and try again. If and when Ford succeeds, it will have more production capacity than it needs because EVs have less parts and are easier to build.
At least $5 billion, and just for Ford alone, is now a sunken cost for an EV schedule that never should have been attempted.
Thank you President Biden, AOC, Elizabeth Warren, and everyone else who created this mess.
J.D. Vance’s Knockoff Theory of Manufacturing
The Wall Street Journal author Allysia Finley comments on J.D. Vance’s Knockoff Theory of Manufacturing
J.D. Vance isn’t weird, but his ramblings on economics are. The senator earlier this year dismissed economics as “fake” in a rant about modern refrigerators. He expounded at a rally last week in Henderson, Nev.: “We believe that a million cheap knockoff toasters aren’t worth the price of a single American manufacturing job.”
Pace Mr. Vance, U.S. manufacturing jobs aren’t leaving for China. They are shifting from the Rust Belt, Northeast and West Coast to Sunbelt states such as Nevada, Arizona, Texas and Florida, which have young and growing workforces, cheaper energy, lower taxes, right-to-work laws and proximity to trade partners, especially Mexico.
It’s true that U.S. manufacturing employment has declined since the start of the century. Mr. Vance blames China’s entry into the World Trade Organization, which gave Beijing increased access to the U.S. market. But that’s only part of the story. Technology also increased labor productivity, enabling manufacturers to produce more with fewer employees.
The combination of cheap Chinese imports and more efficient U.S. manufacturing kept prices down and increased Americans’ purchasing power. In the two decades before the pandemic, prices for clothes, furniture, appliances, toys and televisions declined, often sharply.
Twenty years of falling prices lifted living standards for tens of millions of Americans. Some 90% of American adults own a smartphone, and nearly the same percentage have air-conditioning in their home. Most who don’t have AC live in the North, where they rarely need it. More than 80% of homes have washers and dryers, and about a third have two refrigerators.
Americans are better off owing to millions of cheap toasters, smartphones, refrigerators and washing machines. But what about manufacturing workers who lost their jobs because of them? Such is the march of progress, from the invention of the cotton mill to the modern assembly line. Americans have long adapted by moving or finding other work.
Cheap labor isn’t the reason manufacturers are building new factories in the Sunbelt. Wages for manufacturing workers in Texas now rank among the highest in the country. Instead, they are foremost seeking a business-friendly environment, something China increasingly lacks, and a large pool of industrious workers who can pass a drug test.
Mr. Vance’s toaster line may win some votes, but his prescription for higher tariffs won’t bring back Midwest manufacturing jobs.
Someone gets it. Thank you Allysia Finley.
Massive Failure of Sanctions
On September 4, 2023, I noted US Sanctions Fail Again, China Now Produces Its Own Advanced Computer Chips
Trump and Biden both tried to cut off China’s supply of advanced microchips. The US wanted to knock Huawei out of the 5G market. Now, instead of China using US chips, it is producing its own chips.
China is far behind the US in chip technology. However, it is doing much better than the US expected.
China is producing some chips that the US dis not want China to have at all.
February 19, 2024: US Impounds Thousands of German Vehicles Over One Tiny Part Made in China
The US Blacklisted Xiaomi
On May 21, 2024 I commented The US Blacklisted Xiaomi Three Years Ago Now it Makes EVs
Just three years ago, the Chinese company Xiaomi decided to build cars. It succeeded where Apple failed.
The US forced Xiaomi into a new sector after the U.S. government blacklisted it in January 2021 for what it said were ties to China’s military.
Attempt to Prohibit China’s Access to AI
On August 26, I commented China Gains Secret Access to Nvdia Microchips by Renting Computers
The US has blocked export of Nvdia chips to China. But where there’s profit, there’s a way.
Reason for the US failure goes back to my September 19, 2023: Lesson of the Day: Sanctions Don’t Work Because They Create New Markets
It is the best interest of middlemen in Greece, Russia, India, China, and Dubai to tell Biden to go to hell, so they do.
Critical Materials Risk Assessment by the US Department of Energy
Please consider a Critical Materials Risk Assessment by the US Department of Energy
The US Department of Energy has placed some of the rare earth minerals we need for weapons systems, windmills, batteries, and aircraft on a critical materials list.
Nearly all of them are mined or refined in China. Yet Biden just blocked production in the US.
Shades of Smoot Hawley and Global War Threats
Trump has threatened to escalate a global trade war against not just China, but the whole world with a 60 percent tariff on China and 10 percent on everyone else.
He believes tariffs can replace the income tax.
On June 21, I commented Trump’s Plan to Replace the Income Tax with Tariffs is Economic Nonsense
It would be the biggest trade war since the 1930 Smoot-Hawley Tariff Act worsened the Great Depression.
China could respond by cutting off US access to rare earth minerals.
The word is on a collision course with China no matter who wins in November.
When trade ends, wars start.
”
“Everybody makes stuff in China,” said Joerg Wuttke, former president of the European Chamber of Commerce in China and now a partner at Washington consulting firm DGA Group. “But nobody makes money.”
”
And that’s exactly how, and why, freer markets are more efficient than, and hence outcompete, less free ones.
There are no economic profits in cranking out commodities. Just rents, in totalitarian countries where terror regimes comes up with one childbrained excuse or another for why their favored provileged rent seeking leeches should somehow get to overcharge their more useful and productive peers.
Free markets allow few to none of the risk-free totalitarian-regime-guaranteed pure rents which enables negative-value-add “partners at Washington consulting firm DGA Group” to supposedly “make” more money than productive people who actually build the darned wafers and battery cars.
Noone needs the pointless dregs contributing nothing to production. Hence, left free to choose and under the pressure of free competition which a free country enables: They are summarily routed around and told to get a real, productive job if they want to make a living. With the savings from getting rid of the deadweights, then passed on to customers. Such that prices go lower and lower and lower. Relentlessly and without stop. Prices for everything: Wafers, cars, houses, guns, drones, planes, missiles…… Cheaper and cheaper and cheaper. And more and more plentiful and available.
“Everyone”; aside from a connected clique of slimy, regime protected leeches living high off of their fellowman being forced to overpay for underperforming products and services; benefits from stuff which can be made cheaper, being sold for cheaper.
“China would and could cut the supply or rare earth minerals the US needs…”
The fact that a hostile foreign adversary can, would and has held hostage vital raw materials from the US does not suggest a free trade arrangement. This REQUIRES a trade war that will end in the defeat of one side or the other. With Democrats in charge the past four years, I think China is winning.
These articles remind me of Bill Clinton’s reign. Clinton promoted free trade (NAFTA) and cut government by 250000 employees. He even reformed welfare and balanced the budget. The result was probably the best economy in the post war years. Trump promotes protection and his “greatest economy the world has seen” produced an average gdp increase of less than 1%. btw- The union bosses put the word out to vote Bush in 2000 because they wanted protection, not trade. Unions aren’t interested in the good of the country despite their patriotic mumblings.
Clinton was not perfect, but he was closer to what most of us want in a president than the republicans.
Historically, statistically, the economy, jobs and the stock market, do far better with a Democrat in the White House.
In addition, every Republican president since 1920 has had a recession begin during their term. Ten Republican Presidents, 14 recessions (two of them had 2 recessions, and one of them had 3).
Of course Democrats have had 4 recessions as well during that same time frame. So they are not immune from a recession. The last recession to begin under a Democrat was Carter, in 1980.
As an individual, I never worry about which party holds the White House. I simply look for the opportunities that exist to improve my life, no matter who is in power.
They said that liberals have become completely delusional lately, but WOW.
Not sure what you mean by “delusional”. Some people want the government to run balanced budgets or even budget surpluses. Clinton was the last President to run a budget surplus. In 2001.
Missing from this is that Americans are incredibly well off because they sell paper Dollars in return for tangible goods. I can’t think of a better trade! If I could print my own currency, exchange it for valuable goods and have the ability to simply cancel the paper if I needed to, as I have a very very big military I could unleash on anyone who voiced their objections!
Does seem too good to be true, doesn’t it? China must be really stupid, right? Then one day, once you’re completely dependent on said trade, they begin to ask for their pound of flesh and you will have no choice but to pay it. Then you realize who the stupid ones really are.
“He believes tariffs can replace the income tax.”
Sounds like a Trump hyperbole.
“The US forced Xiaomi into a new sector after the U.S. government blacklisted it in January 2021 for what it said were ties to China’s military”
Huawei, Xiaomi et al are nothing more than Chinese spy bots. I’m very glad to see both of these countries banned from doing business in the US core Internet switches & routers.
“We believe that a million cheap knockoff toasters aren’t worth the price of a single American manufacturing job.”
Good point, Vance! Bravo, sir!
“The US wanted to knock Huawei out of the 5G market. Now, instead of China using US chips, it is producing its own chips.”
Good strategy! Why would we want China using our stuff to supplant our lead? If they have to develop their own stuff, it creates a drag on their forward momentum, giving us a window of opportunity. Granted, we’ll probably squander it.
Great article Mish!
Love that you pointed out how well off the average American is due to an abundance of globally sourced low priced goods.
And why the best way for individuals to get ahead is to keep improving their educations and skills in order to fill the needs of an ever-changing job market.
Tariffs constrict export. In order to prevent a GLUT, China will cut prices.
The US gov will fill it’s coffer. Jobs will be protected. Consumers will pay the same prices, or slightly above, but a good economy lift all boats.
If they cut prices, then they make less profit which is a good thing. And, it means that importers won’t have to raise prices. WIN WIN! Woohoo!!!
Excuse me!!! who started the trade war??????
RUMP our comic cult leader and folk hero?
Which one?
Xi is good for AMZN and DG. Low NG is good for LNG.
Great article, Mish! I think that every time you write about tariffs you should explain to your readers that it is NOT the Chinese who pay the tariffs, it is the USA (or Canadian or European, etc.) company that imports Chinese products, then has to raise its prices to reflect the tariffs it had to pay Uncle $ham
Yes, you are correct.
Usually I mention that
but trump said trade wars are easy to win? seems like genocide joe believed him and doubled down plus a few hot wars to underwrite with we the people’s us treasury.
But, the problem is that Mish never offers up a real economic solution to tariffs. It’s just hammer: tariffs bad. Plan B: crickets.
What bullshit
My solution, mentioned many times, is to do nothing.
Chinese consumers are subsidizing US consumers and you bitch.
Sorry, I missed these past articles that go something like this:
What the US Should Do To Counter China’s Gigantic Trade Surplus
By Mish Shedlock
We should do nothing. Status quo is the name of the game and will ensure the US maintains its economic dominance.
This post originated on Mishtalk.com
I’m sorry, Mish, but doing nothing is not a viable trade policy with China.
Free trade only works when both sides act fairly. China doesn’t. It steals and cheats to get an advantage, and we end up with loss of IP, contaminated drywall, poisonous pet food and milk and baby food with melamine added to it. Not to mention that the world suffers because China destroys the environment to make the products cheaper.
Free trade is the correct policy no matter what the F anyone else does.
To believe otherwise is like candlemakers protesting the sun for loss of candle-making jobs.
If China gave us free solar panels, the correct response is to thank them and ask for more.
Of course, if the drywall or whatever is poisonous, then we should block it. Different issue.
You are caught up in the hear and now and acting shortsighted. China is playing a longer game as should we. USA used to mine rare earth elements. Now we don’t and China has the strangle hold to use against us for whatever policy play they want to extract from us. Same with prescription drugs. If they start a war against Taiwan, Vietnam, Japan, etc. they can simply threaten to shut off our resources if we interfere or try to defend. We can’t let that happen.
We have laws against monopolistic behavior by private companies. China is engaging in the same prohibited behavior.
That’s a very elementary view of things. It’s not that simple.
“Shades of Smoot Hawley and Global War Threats”
The phase of the long term cycle is lining up again. In 1999, congress got rid of Glass-Steagall, which was supposed to prevent this phase of the cycle again. Cycles always get their way.
pax dumbphuckistan is just another empire crumbling under debt, idiocracy and trying to rule the 7 seas. yawn.
Ismail Haniyeh planned to oust King Abdallah. Hamas wants to replace the Palestinian Authority in the west bank. Bibi carved Jenin and Tul Karm, protecting Mahmoud Abbas.
LMAO, Clinical definitions regarding projection and narcissism.
Look inwards people. Fundamentals and reality.
The country that started all of this is the U.S. with their endless regulations that grow exponentially and their massive green energy Ponzi schemes. As well as the corrupt military industrial complex that would suffocate with out endless expeditionary wars and mass civilian death.
U.S. off-shored all of their manufacturing and printed trillions of dollars. Oh you think the running deficit is 34 trillion? More like over a 100 trillion with cost accounting that pushes budget liabilities out 10 and 20 years so they don’t have to report them today or next quarter.
Then they decided to start economic wars with Russia and China through sanctions and confiscation of nation state reserves etc and so on.
U.S. can not compete and now they have divided their market in half along with alienating the world at large.
U.S. only option is war so they can default on their debt.
Suicidal tendencies of the Idiocracy that pervades the American dream.
There are always solutions/options. Yours is war and default. My solution is to tighten the nation’s belt. It might/will take a revolution and a few headless Congress-things before it happens.
Some ways to get there:
1) the US Federal Budget can never exceed 5% of GDP. This means slashing government salaries and benefits, with no decrease in effectiveness–which isn’t high to begin.
2) institute a VAT of 10%, to be used solely to pay off the National Debt over 30 years–the current debt would be divided into tranches with maturities, 1,2,3,…29, 30 years.
3) DEI dies, and FMR takes over (fairness, merit, and responsibility)
Fantastical ideas you have. Too bad we have too much air conditioning to enjoy and football to watch.
Now, back to the cat videos on youtube.
Rare earths are not rare. On the contrary rare earths are abundantly available in USA, Canada, Norway, South Africa…. The issue is toxic hazard of refining rare earth metals. China expends human lives without compunction in the manufacture of rare earths, coal, chemicals, et.al. Russia expends human lives without compunction in suicidal warfare tactics. USA expends human lives without compunction with fast fake food and traffic jams. Cultures differ.
Ah yes. Russian human wave warfare. LOL
Doesn’t work if the defenders have lots of bullets.
As the Ukies found out during their 2023 “counteroffensive”.
General Syrski uses maneuver warfare to encircle and slaughter Russians at Kursk. Russian conscript carnage is top secret because it is embarrassingly high. Here is an example of Russian static defense against laughing Ukraini.
https://x.com/front_ukrainian/status/1830550497452757350
Go sell that bullshit elsewhere, Langley.
One virus = 100 million bullets
USA has been bombing the poorest parts of world my entire life………
https://globalvoices.org/2024/07/12/as-evs-gain-momentum-in-brazil-chinas-influence-shines-through/
The Allysia Finley piece misses the mark in many respects. The CCP has had a massive growth in economic power, and power in general, while becoming more of an oppressive evil in the world (spreading Covid, for one thing, and helping set up Machurian candidates with corrupted Biden, Harris and now Walz). This is what pro-China policy, and offshored manufacturing, has brought. Yes, it helped make goods cheaper here, it helped US companies make profits, but with both short-term and long-term big costs, esp. as world stability and freedom are concerned. A poorer communist China would have been better, and worth some toasters. You don’t export your wealth to the worst of the world (and import your population from the worst of the world, and increase massive debt), and expect good results. Big costs we are only starting to see.
You can blame Bill Clinton for the rise of China. He gave it away (trading status) to hide a cigar.
Exactly. But proponents of free trade would have us believe that giving up our freedom for cheap trinkets from China is worth it. They are nothing but a bunch of academics caught up in an equation and ignoring the real world.
China loses any trade war the minute we decide to cut off their impetus of food and fertilizer.
A single mine in California can provide ask of our rates earth needs
https://grist.org/energy/a-once-shuttered-california-mine-is-trying-to-transform-the-rare-earth-industry/
I’ve heard there’s a big country adjacent to China that produces a lot of food and fertilizer.
California will need 100 years too get that project approved
I’ve switched my consumption model. I have too much sh!t. I only buy the highest quality products and for every item than crosses my threshold at least one item goes out. I don’t care where it comes from as long as it is high quality at a competitive price.
I wish more countries would work on building their middle classes. Progressive tax structure, busting up monopolies, tons of needless regulations creating barriers making small business entry into many markets almost impossible, and stronger private sector unions in bus sectors with extremely high profit margins would be a big plus here in the U.S.
“The second is a deep-rooted philosophical objection to U.S.-style consumption, which Xi sees as wasteful.”
Hmmm, reported to be against ‘US-style consumption’ yet Xi’s hold on power requires him to enable that consumption in order to keep China’s manufacturing sector from collapsing. One wonders if that contradiction causes him to lose any sleep at night.
Not at all. CCP strategy is just that: Keep their own people’s consumption (esp. of foreign goods) very lean; while selling everything possible to US and other countries (esp. to help bring in valuable foreign currency), with their overconsumption like a drug addiction. And Amazon and now Temu have taken it to the next level, along with rampant illegal immigration into the US, which helps keep US demand for Chinese goods growing.
This has been the CCP business model for decades now. Xi is sleeping just fine.
Apologies, I didn’t think that a sarcasm label was needed.
If one hasn’t lost sleep over the repression/ subjugation of certain ethnic groups and actively suppressed said information, then incongruent sentiments typical of politicians won’t make him lose sleep.
Still lacking is any discussion of where sustainable demand is supposed to come from.
As Monetary policy has pulled future demand to the present for decades, the future has gotten spent without changing into a positive direction, disposable income portion of economic Pie for Consumer.
Money supply depending upon how it gets analyzed is either flat or decreasing which indicates debt assumption is flat or trending downwards.
In a debt based economic growth model that spells Recession. China and every other export dependent nation is in Heap Big Trouble.
People are now faced with a choice do I pay for a roof over my head or the latest Wizz Bang Widget on the shelf? Roof over ones head is the winner.
Since Powell and company have engineered a Housing shortage along with adding 10 to 15 Million illegals needing shelter by the geniuses over at WH this is not going to get resolved without pain in the economy.
By the way shutting down Housing production is a tried and true method of decreasing supply. This is probably a revelation for the monetary masters over at the Fed.
If there truly is a housing shortage, there is a construction industry ready, willing, and able to fill it.
If people want a Wizz Bang Widget in lieu of a roof, that is their choice, their values, and their business. It isn’t free enterprise/capitalism that got us into this mess. The g-d government needs to do its job and balance the g-d budget by cutting its own spending, increasing its effectiveness, and firing about one in three of its g-d employees.
What the US needs to compete is the critical component of economics–divergent thinking–which creates new markets and industries which meet peoples’ needs/wants. That means a paradigm shift in education and replacing DEI crap with Fairness, Merit, and Responsibility.
There is a construction industry ready ? Try to find some skilled Trades that are competent. In my neck of woods the newest source of Labor is attempting to train those who cut grass as electricians. The Boss goes to a job site and spray paints blue, red and yellow dots where his cough, cough, electricians are supposed to drill holes to run wire.
There is a construction industry willing? Keep tabs on how long new workers show up once they find out they actually have to break into a sweat cause there isn’t any A.C. on a Job.
There is a construction industry Able? Well I know of a young fellow named Able and as a worker he is a rarity with his stick to it ness. Still needs a bunch of in the Field training which only comes with Time. Takes 8 years of working to learn a Trade and be competent. Some of the fields a person almost has to be born into it as things are getting seriously complicated to meet compliance regulations.
A second facet of being Able is that people who want to own are very short in the Wallet when it comes to paying for that Able trades person to be able to work for that customer.
Fed has thrown away 3 to 4 years worth of production as they vacillated between extremes of monetary policy. Ultra-loose causing heavy price increases and then panic a second time and send production buckling as it is now.
The last thing president Xi wants is a wealthier Chinese population. Instead of propping up their consumer sector he concentrates on exports. The Chinese population with a higher standard of living would want even more of the same, hence the degrading of CCP population control.
Sounds like something Trump will do if re-elected. So give him your vote and usher in a global recession which is the ONLY way high home prices in the US are going to return to the mean.
Good enough reason for me! Woohoo!
And no, I’m not being sarcastic.
So, it not /sarc, then, this is human intelligence at work. I’m the first to agree that Trump’s policies will do little to avoid a recession–it’s been 20+ years in making. Every time you voted, you contributed to the mess, by never holding politicians accountable.
I don’t know about all that garble die gook. I just know the ONLY CURE for high home prices in the US is a recession.
A rescission won’t have much effect on home prices it will just transfer more homes to Blackrock and other investment banks.
There is more correlation with having high trade and going to war all the same than with trade restrictions leading to war. Generally trade restrictions lead to negotiations and a reorganization of the markets rather than war. Exceptions would be when the Portuguese broke into the Indian Ocean Trade in the 16th Century and when Phillip II restricted trade of the Netherlands cause the Dutch Revolt aka the Eighty Years War. However a trade restriction can be used by an inept government as an excuse to make a very stupid decision as did the Japanese government with Pearl Harbor. Normally though, tariffs do not cause war.
If all of the free trade has been so good for Americans, then why has the middle class collapsed? Real wages are not up except for the top.
Life expectancy for those without a college degree is now 8 years less than those with a college degree. The economics of the US is bifurcated. Two different worlds and no compassion for those in the bottom portion.
The US middle class grew because the US came out top-dog from WW2. No other reason. Its current global domination depends on subordinating the rest of the world by military and economic power,
That life-expectancy difference has little to do with a college degree per se–certainly not causality.
The life expectancy difference has to do with despair, drugs and alcohol. A lot of people make a lot of money off prescription drugs and the epidemic of addiction. Now China plays a part with fentanyl and we turn a blind eye as 100,000 people a year die of addiction. Many young people.
But I guess it’s worth it if that flat screen TV is cheaper.
amerika is also to blame. we are a very depressed and very nasty worldwide empire. our adults are depressed and jacked up on all sorts of drugs, booze, shopping……..our youth are depressed and demand fentanyl…………..the world supplies our demands
China is merely paying back the US and Europe for the opium trade of the 19th century.
However, the national malaise that ’causes’ despair,drugs, and alcohol’ is NOT about people making a lot of money from it.
What then, are the causes of the ‘US disease’? There is no easy answer. However, Maslow might hold an answer–a ‘need’ that he referred to as ‘self-actualization.’ IMHO, the antithesis of self-actualization is dependency on others.
What happened to individual responsibility? No evil China man is making you take drugs.
We haven’t had free trade. Free trade/markets means the govt doesn’t artificially suppress interest rates with printed money that isn’t backed by new goods and services. A major case of unfree trade being the govt buying mortgage backed securities, pushing mortgage rates super low which enabled the hoarding and speculation of housing that’s burdening our society today.
Petit has commented for years that China needs to balance away from exports / mercantilism to domestic consumption to balance the economy. And now once again, CCP exporting disinflation and fentanyl. State sponsored warfare. Free markets lol. Yeah, no. Shut it down.
“When trade ends, wars start.” Big thumbs up.
Look at all this from Xi’s perspective. China’s economy is in a rough spot. Exports can solve it. If the economy goes badly, he’s probably done.
The only rational response if trade is blocked is to fight. Our leaders would do the same.
Figure out what war China could win. That’s the one we should expect to happen if the West continues trying to block China’s economic growth.
Different viewpoint in the book “The 100-Year Toaster: A Socioeconomic Critique Kindle Edition”:
https://www.amazon.com/gp/product/B0D8HBBMZK/ref=ppx_yo_dt_b_d_asin_title_351_o07?
That recent book is about how the gigantic load of cheap unreliable junk from China IS the problem.
“Sure, there are too many people in the world. Tough on the planet and all. But Ure unleashes in his quirky thinking style and concludes population is only part of our curse. The balance of issues may be laid at the feet of slipshod goods from a manufacturing sector designed to make money at the expense of long-lived, smart humans.”
Mish, what do you propose in a situation where the US faces mercantilist competition? I understand that you don’t like tariffs and sanctions, and why, but you have got to propose some solution that does not involve the US simply losing all of it’s jobs/industrial base.
Great book by Luke Gromen suggests the following which both the DNC and GOP are touting, although it feels only one side would be serious about making a move like this as it will significantly reduce the role of the dollar as primary reserve currency (feels like Vance had read the book or something) :
Devalue/weaken the USD significantly, thereby increasing US tax receipts and rebalancing the US economy away from consumption toward production, centered around US energy and alternative energy sectors and infrastructure as US energy costs rise.
Invention is the mother and father of competition. The US either innovates continuously to stay ahead, or it goes the way of the dodo bird. The bad news? The US education system is currently incapable of generating innovative minds.
With a few dozen Steve Jobs and Elon Musks the US would experience a renaissance. Instead, we hire, promote, and reward DEI.
DEI is losing its force in business these days.
If Trump had a brain, he’d talking about XYZ as a way to refocus the nation’s values. My version of XYZ is Fairness, Merit, and Responsibility.
The Libertarian view is that losing your industrial base is not a problem because you will always be able to sell something although they can’t tell you what. If it goes far enough you will only have land and housing to sell which means you become a renter forever. There again the Libertarian view is that that is not a problem either because you will always be able sell something else like yourself for life. After that I don’t know what else you will have to sell.
What you’ve conveniently left out here is that the Libertarian view also says at some point you’ll equalize because either the other sides cost will rise to meet yours OR your cost will lower to meet theirs.
In other words the US wages and other local costs could also lower to meet the Chinese level of costs + cost of transporting those goods across the ocean. No one in the Western world wants to do this 2nd part so of course the discredit the idea of Libertarians.
That is the Libertarian theory but not the reality because the terms of trade do not equalize until one side is already so far down the value chain. It’s happened time and time again in economic history. Libertarianism seems to work only for city states and only then as long as they have stable international markets.
wrong. thousands of years from western to eastern to indigenous populations of north and south amerika cross border trading was done freely with huge success. the snubbing of free trade by the uniparty imperialist world wide warmongers are ignorant. read graebers books to get a grip on human history. or enroll in some anthropolgy and ancient history………..
bingo. also with a sound money system pegged to gold and exchanged for silver or gold, the trade balances swing back and forth without getting to our point now……….which is bananas.
You assume the only ‘good’ lifestyle is owning a house on a piece of land.
the post ww2 boomers were brainwashed to be employees with a mortgage and a house………make them serfs.
forget the labels. if we went back to the 1800s funding of US treasury by only federal land sales and tariffs without any income tax, that would make libertarians and uniparty R and D in high cotton. i’m a classical liberal when i vote in EU and USA. in amerika folks call it libertarian. the greens seem very sane too. the uniparty red and blues want never ending warfare and ruling the 7 seas……….a very dumb idea which has failed so many times in world history. my Roman Republic morphed into an empire by trying to take over the known world. i’m re reading “republic of Plato” and taking a poli sci class this semester. we discussed the birth of democracy when the greeks just voted for actions and laws and NOT MEN.
In theory the industries that are lost would be replaced by a better economic base. Creative destruction. In theory there is no difference between practice and theory, in practice there is.
Allysia Finley gets it? I think the article is pure gas-lighting and apologetic for Washington’s statu-quo desire involving the intentional swapping out of the country’s industrial base for UST “exports”, all for the benefit of the top 1% and a couple of decades of cheap goods that were never going to last. Give me one industry that became “so efficient” that it could have been responsible for the sharp drop in manufacturing jobs, right after China gained MFN status in the early 2000s. So now that the entire industrial base has been hollowed out, anyone buying USTs as reserves is simply funding an ever growing US deficit. No, Vance is spot on.
The Chinese must be getting poorer and poorer subsidizing all that cheap manufacturing to the rest of the world. Such cheaters.
Maybe the West should do the same thing to them, flooding them with ultra cheap manufactures funded by the consumers/tax-payers here whose pockets surely must be deeper than those immiserated Chinamen.
“The second is a deep-rooted philosophical objection to U.S.-style consumption, which Xi sees as wasteful.”
The objection can’t be too deep-rooted if Xi is everything he can to encourage it.
Typical ethnocentric/economic prejudice. Encouraging “bad habits” in others is okay if it keeps your own people “philosophically pure” but poor, but especially if it makes you richer!
Chinese chips are not far behind, but on par with US chips. The widely mocked Chinese chips use the equivalent of the best manufacturing process that Intel or Global Foundries has.
China is far behind chips made in the US by foreign companies, like Samsung.
So what they can make cars better for 1/3rd the price and we put tariffs on them so American consumers lose while rest of the world wins – how about getting competitive by lowering regulations and stopping subsidies and add worker training- ridiculous policies and too strong dollar have crushed manufacturing here
I just purchased some nice running shoes made in Indonesia. I have purchased decent clothing made in Bangladesh and Pakistan. All bought through AMZN including AMZN Basics.
Did Amazon inform you the shoes were made in Indonesia prior to you placing your order?
See, if you shopped in a bricks&mortar store, you’d see the statement-of-origin sticker on the item, and you could take that into consideration.
If you wanted to help your fellow Americans, you’d write your Congress-thing and tell them to require ‘country of origin’ on EVERY WEBSITE selling ‘stuff.’
It was described on the AMZN website as imported. I am pretty sure all US brand running shoes are made in other countries.
That’s why it is called country of manufacture is so important. Some of the biggest ‘abusers’ are US companies, talking advantage of low wages. regulation.
China is F789ed… (we are all f789ed)
Li Ka-shing’s Luxury Mall Sits Empty as Chinese Spending Plunges
On nearby Canton Road, a shop previously rented by Swatch Group AG’s Omega for about HK$7.5 million ($962,000) a month is leased to a bank for 80% less, according to real estate agents familiar with the deal. Over in Causeway Bay’s Russell Street, a Transformers-themed fast-food restaurant has taken the place of Burberry Plc. Its rent is 89% below the HK$8.8 million the British firm was forking out in 2019, the agents said, declining to be identified because the matter is private.
https://www.msn.com/en-ph/money/markets/li-ka-shing-s-luxury-mall-sits-empty-as-chinese-spending-plunges/ar-AA1pSzsv
China economy is a lot weaker then getting acknowledged. They are in a full on weakening and probably even negative growth rate environment.
That they are out of options using stimulus and now target exports to keep jobs so as to suppress unhappy people from tossing their Government is what motivates Xi.
Since the West is unable to act as the consumption Buffer for China, Kiss the past several decades Globalist order goodbye.
Debt based consumption model has no room to expand.
Price is no longer final arbiter of consumption.
China’s economy has been on the verge of implosion for two decades now…
In the meantime, they are building more energy generation than the rest of the world combined (nuclear, wind, hydro, fossil fuel), roads, bullet trains, infrastructure mega-projects), yes, and have you noticed their growing share in tourism around the world? To top it off, they are building peace between nations, and have the mid-East, Africa, and Central Asia in their pockets. Their plight is desperate. Soon they will be as poor as the Japanese with their almost 5 decades of a dismal economy
What is China’s weak spot? It’s miserliness or meanness with its own people. It can bring prosperity (i.e. work at meager wages) to its people but because it is philosophically rooted to the communist doctrine, the State can never bring genuine happiness and economic tranquility to the people at large. This is why the State must suppress the will of the Chinese people, because if they were truly allowed to reach their potential they would overwhelm their own government and have an even greater influence on the world economy. This is what Xi and the Communist party truly fear.
You are either living in DelusiSTAN… or you are a pro China AI bot (which would mean you have zero intelligence).
China is f789ed…
For centuries, China boasted the largest population of any country, giving it significant global heft. That is changing as China’s population shrinks and ages at a faster rate than almost any other country.
In 2022, China’s population dropped for the first time in decades, and in 2023 India surpassed China to become the world’s most populous nation. China’s changing demographics pose major, prolonged challenges for the country and its leaders.
China has for decades reaped the economic dividends that came with having a young workforce to fuel China’s emergence as a global industrial powerhouse.
Now, the number of Chinese retirees will soon skyrocket, reducing the size of China’s workforce and putting pressure on China’s social safety net and healthcare system.
https://chinapower.csis.org/china-demographics-challenges/
Suck on that
Chinese university graduates are having a very hard time finding jobs now.