On Wednesday, Trump told reporters that the two sides were “actively” talking. On Thursday, a Chinese foreign ministry spokesperson said conversations had yet to begin. “None of that is true,” Spokesperson Guo Jiakun told reporters during the Foreign Ministry’s daily news conference. “For all I know, China and the U.S. are not having any consultation or negotiation on tariffs, still less reaching a deal.”
Wall Street responded positively on Wednesday after Treasury Secretary Scott Bessent and Trump raised the prospects of a deal. The Wall Street Journal reported that the White House was considering whether to de-escalate by slashing some tariffs. Bessent said there was “an opportunity for a big deal.” On Tuesday, Trump said tariffs on Chinese goods would come down “substantially” from 145%, which the White House imposed after Beijing slapped retaliatory tariffs on US goods following the president’s “Liberation Day” announcement.
According to CNBC, a separate Chinese official also said there are no ongoing talks. “At present there are absolutely no negotiations on the economy and trade between China and the U.S.,” Ministry of Commerce Spokesperson He Yadong told reporters. His remarks were originally in Mandarin and were translated by the financial publication.
https://www.businessinsider.com/china-trump-trade-talks-latest-state-2025-4
Comment: In addition to saying tariffs would come down substantially, Trump ended his threats to try to fire Powell. The markets were gleeful. I doubt they cared whether Trump’s tariffs drove the nations of the world to the White House on bended knee begging for relief or Trump just changed his mind. They just want the tariffs to go away. It seems this may be a response to Trump’s meeting with the executives of Walmart, Target and Home Depot where the CEOs laid out the coming effects of the tariff war. They painted a grim picture. Trump apparently listened and announced the tariffs on Chinese goods will come down substantially. Bessent intimated that a big deal was in the offing. But that looks like face saving talk. China said there was no talks on a deal and that no talks were possible until Trump backs down on the tariffs. They are not offering Trump a dignified, face saving off ramp.
This SNL skit probably has a lot of truth in it.
Trump is still claiming that his tariffs are bringing in millions, even billions in revenue. He must know in his heart that these millions and billions are coming from US businesses, not foreign countries. He has already put in mechanisms to offer farmers millions in compensation for lost sales and is now talking about compensating businesses for their losses. What’s the point of tariffs if the money taken in as tariffs is immediately passed back to the businesses paying those tariffs? What kind of business genius is this?
But Trump is certainly smart enough to change course from his plan to make America great again through massive tariffs… no matter how enamored he is with the word. He’s already adjusted. I think he’ll back down further as soon as he can devise a face saving excuse for doing so. What follows is anybody’s guess.
TTG
“China says” – yeah, China is not exactly the gold standard for honesty.
The rest of the post? Goes into the same file folder as “The Russians will be out of ammo in 30 days” and “Get the vax and all the boosters because it prevents contracting covid!”
Once again, the tariffs are primarily aimed at wrecking China’s global ambitions via economic destruction, which needs wrecking and with which we are at war (whether you believe it or not) and a secondary goal is to stimulate the return of domestic manufacturing, which will take time to come to fruition. Some tweaking of trade relationships across Europe and SE Asia is also a feature. The impact on China is intended to be more immediate and there is ample evidence that it is occurring. Of course, that evidence won’t be mentioned in the MSM because MSM is beholden to China, directly and through globalist corporations that use the MSM to spread whatever BS they want spread – and, naturally, MSM has extreme TDS.
Eric..Ah in German That Erich….Point…Millions of People..
World Have Integrity..Morals..Spiritual Faith..As a Rock to
Stand on..A Good Foundation…Not of Sand..,And They All
Resent Tyranny..and Political Activist,,Who Spread Hate
And Propaganda ….. I Think You Have NO Foundation.
JIM.
Jim,
Free flowing BS. Most of the world lives under tyranny, or something approaching anarchy – and poverty. When they do manage to overthrow the tyrant, they replace him with a new one. I thought you were better than some Rousseau fantasy. Now you have faith in the Chinese communist system? How many bullet blasted skulls is that regime built on?
I’m not one drop German, but what are you saying? That all Germans are Nazis?
And for balance a look at China’s weakness. They cannot replace the American consumer anywhere in the world. The US was the No 1 export nation before the Great Depression and was extra hard hit when global trade collapse. China is now in that position.
https://bsky.app/profile/michaelpettis.bsky.social/post/3lnmebzllcs23
“Reuters notes that Chinese exporters are “reluctant” to heed government calls to sell locally, citing much thinner margins and a greater risk of non-payment.
In fact they’re much more than reluctant. Domestic demand is far too weak to absorb domestic production, so that the idea that exporters can “decide” to shift sales from exports to domestic consumption is just a fantasy.
The only way to reduce net exports without closing down factories is to boost domestic consumption, and this can only be done quickly with higher consumer lending or higher fiscal deficits. Exhortations to sell more domestically miss the point altogether.”
“Reuters notes that Chinese exporters are “reluctant” to heed government calls to sell locally, citing much thinner margins and a greater risk of non-payment.”
Pardon? I thought that China had a command economy, and that “not heeding” a government call is not actually an option.
Now, apparently, it is. How odd.
What else about China isn’t really what the West is claiming it to be?
YR,
Here’s another silly question you may want to contemplate – if levying tariffs is going to be so destructive to the US, as the lefties are screaming, how do countries like China, Canada, India, the EU, etc. levy tariffs on imports and not be destroyed? Apparently, tariffs are only destructive when Trump sets the policy?
As for your Chinese exporters questions, I wouldn’t read too much into it. First off, it’s a Reuters article. So something written by a totally biased ignoramus. When has the media ever gotten anything right?
Second, Chinese industrialists do get input into government decision making. It may ultimately be ignored in part or in whole, but they do have some level of contribution via an advisory board. So the reluctancy may just be that they are reticent to praise and endorse the policy – it doesn’t mean they get to violate it.
Eric: “if levying tariffs is going to be so destructive to the US, as the lefties are screaming, how do countries like China, Canada, India, the EU, etc. levy tariffs on imports and not be destroyed?”
Oh, that’s an easy one to answer: those countries do what the USA did back in the 19th century/early 20th century.
As in: look at what industries need protection from foreign competitors, decide on what level of tariff to levy to provide that protection, and then impose that tariff.
They don’t make it a moveable feast. They don’t impose a (say) 12.5% tariff then say “let’s negotiate on it”.
They work out what level of tariff will produce the desired level of protection for local manufacturers, and that’s the tariff they impose.
Or, in short: they do the exact opposite to what Donald Trump did on Liberation Day and after, which is to treat tariffs as a negotiating tactic and not a means of protecting local manufacturing.
You know, what the USA used to do back in The Good Old Days.
Yeah, Right – absolutely agree. In addition, such tariffs should be notified well in advance, preferably negotiated, to give both trading partners time to adjust.
In a recent article (via ZH) Escobar mentions two significant facts which, if anywhere near correct – and I believe they are at least indicative – show the size of the problem when a partially deindustrialised Western nation like the US seeks to rebalance its economy:-
” A great deal of China’s rural elderly population survives on a monthly pension of roughly $30 a month, and the hourly rate for the gig economy has stagnated at around $4.”
“Meanwhile, in several high-tech fronts, China just built the fastest high-speed train on the planet: 400km/h, soon to run between Beijing and Shanghai. China is already receiving orders for the C919 commercial wide-bodied airliner. And China has come up with the world’s first thorium-powered nuclear reactor.”
(https://www.zerohedge.com/geopolitical/escobar-china-hong-kong-art-blinking)
Underneath all the talk of dollar supremacy or Treasuries as a safe haven, what matters is the underlying flow of goods and services. It matters to both sides. What is the point of China sending over floods of goods to the West if it can’t get goods and services back? Might as well dig a hole and throw all the Chinese goods in it if there’s little of benefit to the Chinese coming back the other way!
The German case vis a vis the EU is instructive here. Germany is or was one of the few large countries in the West that has or had a positive balance of trade. In the German case that’s not because of cheap labour or because they are at the forefront of high tech. It’s because they’re better than the rest of us at making stuff: they can turn out manufactured goods of reliably high quality and that on a scale no others can equal. They therefore dominate the market.
What good does it do them? What do they get back in return for the manufactured goods they are supreme in exporting?
Obviously they get back a good amount. But they don’t get back goods and services equivalent to those they export. The surplus is taken up by part of the Target 2 balances and the various subsidies Germany donates to the other European countries. Within Europe they are in truth subsidising their export market by these means.
Since the Target 2 balances and the subsidies are not true investments – there is little possibility of either being repaid or even bearing real interest – the Germans might as well be digging a hole and filling it up with their surplus Mercedes etc.
That’s an exaggeration of course, but not entirely so. The Germans don’t get back from their trading partners the full equivalent value of the goods they provide. What’s in it for them, after all that effort, if the German in the street doesn’t get richer but merely has the satisfaction of seeing book surpluses that will never translate into goods and services he can use?
The German trading position is blurred at present by a dysfunctional sanctions regime, by German industry getting a little behind the times when it comes to developing new products, and by increasing German outsourcing – but strip away those factors and the basics remain unaltered. Germany, even today the industrial colossus of Europe, is not getting sufficient return for the goods and services it exports. I recollect a German economist, decades ago now, remarking sourly that it was all very well furnishing the wealthy of Europe with Mercedes for little return. Germany ought instead to be focussing on getting those Mercedes into more German garages!
As an ultra-environmentalist I’m dismissive about the value of turning out Mercedes etc ad lib anyway, but that’s not relevant here. The Germans, as most of us, measure their quality of life in Mercedes units and by that measure they’re not getting value for the effort they put into making them.
If the Chinese aren’t careful they’ll find themselves in the same bind but on a global scale. They need to rebalance their economy so the goods they produce are used by their own consumers rather than being sold abroad to build up surpluses they’ll never get full value for.
Both sides therefore badly need to rebalance their trading relationship. Tariffs, negotiated well in advance so the necessary rebalancing doesn’t lead to severe disruption, are one means of doing this.
Using tariffs for geopolitical strong arming instead of for a mutually advantageous rebalancing of trade is quite a different matter. Then the tariffs become no more than a form of sanctions.
The West uses sanctions far too much and we see the endless disruption and suffering so caused. In the long term that is not only mutually disadvantageous. It can only lead to the Americans, and the entire West with them, being shunned as reliable trading partners. ,
Steve Hsu on his podcast Manifold said that exports to USA comprise 2% of China’s GDP. He says that if you assume those exports will be cut in half, that will reduce China’s GDP by 1% … and China’s GDP grew by 5% last year.
I don’t know if his math is correct – but he teaches theoretical physics at Michigan State University so he is probably not terrible at math. I’m not buying into his reasoning entirely but I would love to hear a counterargument that actually has numbers in it.
James: “He says that if you assume those exports will be cut in half, that will reduce China’s GDP by 1% ”
Is that based on the assumption that China can’t redirect those exports elsewhere? I assume so, in which case his figured greatly exaggerate the impact this will have.
The Chinese government has been deliberately suppressing domestic consumer demand so that the economy could remain export-oriented.
They’ve been gradually loosening that dead hand over the last few years precisely because they could see that China and the USA were going to go through a divorce.
Now that’s come with a large Thud! so I don’t much doubt the Chinese will accelerate their efforts to stimulate domestic consumer demand, which will soak up at least some of that production.
And, let’s face it, the very existence of BRICS+ shows that the Chinese have been preparing for this for many years, and they’ll now turn their attention to redirect some of their exports to those countries.
James, a couple of examples to show that the Chinese government had already been taking steps to stimulate domestic demand:
https://english.www.gov.cn/policies/latestreleases/202503/16/content_WS67d6b21bc6d0868f4e8f0da0.html
http://english.scio.gov.cn/in-depth/2024-12/10/content_117597795.html
James,
His math is wrong as are his fundamental assumptions. As I said in another comment, China’s GDP growth is somewhat artificial. It has been based on building internal infrastructure and that building is coming to an end because a) the money is drying up and b) the infrastructure is overbuilt, meaning there is more than is needed. It has gone well beyond the point of diminishing returns; so much so that each marginal dollar of investment represents a loss.
Here are some figures on what percent of exports and the Chinese economy come from exports to the US;
https://www.visualcapitalist.com/visualizing-chinas-dependence-on-u-s-trade/
Here is an analysis of tariff impacts on the Chinese economy that is at least based on some understanding of economics, as opposed to emotional outbursts arising from hatred of Trump and the US generally.
https://www.eiu.com/n/the-impact-of-us-tariffs-on-china-three-scenarios/
TTG,
“What’s the point of tariffs if the money taken in as tariffs is immediately passed back to the businesses paying those tariffs? What kind of business genius is this?”
The kind of business genius who had 6 bankruptcies. This “genius” is dying for a phone call from China. Nothing but crickets.
TonyL,
You really don’t understand this topic at all.
China’s economy is in trouble. Xi declared China would grow at 5% GDP/yr indefinitely. Most of the phenomenal growth in China GDP has been from building. The building has consisted of massive rail and road projects, entire modern cities, damns. Now they have over-built. There are only so many people and cargo to travel on the rail system, only so many cars and trucks to drive on the roads, only so many people to live in the new cities (in fact, some of the cities are call “ghost cities” because no one lives in them). This is the type of issue encountered by top down socialist systems.
On top of that, the Chinese people are savers. They don’t want to spend. Furthermore, they don’t want to invest. The prospects of turning money into more money have dried up because the biggest projects are owned by the government and are over-built and there is no ROI. Also, there are all kinds of stupid top down socialist regulations around investing that make it less attractive.
Then there is the fact that China must import a lot of materials necessary for manufacturing and for maintenance of modern society.
The only way China can sustain GDP growth is through massive exporting to big markets, like the US – and by exploiting foreign resources, as they are doing in Africa and elsewhere across the globe. Oh yes, and stealing technological advancements, prohibitive tariffs on select imports and various unfair price setting and other top down economic controls.
So Trump’s tariffs, which other countries are joining, against China are incredibly threatening to the fragile and now failing Chinese economy. We have alternatives for cheap imports. We can produce internally if there are favorable tax break incentives and relief from onerous regulations. There are emerging markets in India, Vietnam and South of our border, if we need cheap imports. If the US materially decreases its reliance on China – and brings some other countries on board the program – then China is going to be clobbered, very badly clobbered.
This is all a good thing, unless you’re in league with the Chinese and/or think it is a good thing for the US – perhaps some day the whole world – to be dependent on an increasingly globally aggressive China; or if you are just a brainwashed idiot that believes one must resist anything Bad Orange Man does because he’s bad Orange Man.
Eric Newhill,
It’s true anyone saying the Chinese economy is in good shape is fooling themselves. This tariff war is hurting China, too. But much like Bowen Yang said in that SNL sketch, China and the Chinese people can probably suck it up longer than the American people. Unfortunately we’ve become more consumers than citizens.
Interestingly, data from 2023 shows US tariffs on China were far higher than Chinese tariffs on US goods with a tariff gap of 12.5%. Not so with India. India placed high tariffs on US goods with a tariff gap of 13.7%. Most other major trading partners have higher tariffs than us, but the gap is not much, usually under 2%.
You forget about currency manipulation a very big part in how China gains competitive advantages.
Worth reflecting on this chart. How come the Yuan is not strengthening vis a vis the Dollar. I see a lot of state-owned Chinese banks buying dollars to keep it up in value.
https://www.google.com/finance/quote/CNY-USD?sa=X&ved=2ahUKEwjZ_cinmveMAxXnFRAIHVV1G7UQmY0JegQIChAo&window=MAX
Poul,
China has been doing that since the early 90s at least. It’s been a central tenet of her central economic policy. Like tariffs, currency manipulation is neither inherently good or bad. The US often “talks up” and “talks down” the dollar.
When it assist you in building up huge foreign currency positions then it’s a bad thing.
What is the purpose of manipulating your currency other than gain an advantage in industrial policy.
The simple way to eliminate that manipulation is to tax the shit out of Chinese dollar holdings. If they don’t want to buy American then they lose it trough taxes.
Force them to either buy American or dis-invest with massive loses and no future trade surpluse with the US.
Poul,
Sounds like we want a third opium war.
And the solution will be the same as the Chinese chose. Make your own opium aka industrial goods.
That way they avoided the loss of silver which created the grueling deflation that plagued the Qing economy at that time.
Eric Newhill,
“We have alternatives for cheap imports. We can produce internally if there are favorable tax break incentives and relief from onerous regulations.”
“There are emerging markets in India, Vietnam and South of our border, if we need cheap imports.”
“If the US materially decreases its reliance on China – and brings some other countries on board the program”
The statements above showed a very superficial understanding of the issue.
I’d suggest looking up “capital goods” and have an understanding what it is. Low cost exports are possible because they were built from low cost capital goods imported from China. That ship has sailed long ago. US produces very little of these internally, and with much higher cost. Countries like India, Vietnam, and other developing countries are depending on capital goods from China to produce low cost exports to the US, Europe, and the rest of the world. They never are going to stop importing these goods from China.
TonyL,
You should stick to IT or whatever it is you allegedly do for a living.
India, et al obtain “capital goods” from developed countries like the US, UK, Germany and, perhaps surprisingly, the Gulf States + Saudis.
China actually restricts delivery of capital goods to India et al largely because China can’t handle competition – and their capital goods suck and can’t keep up.
Think about it, why would China share the basic components necessary to establish factories and other form of production. You’re just making stuff up. Stop it. It is a waste of time and I worry that you might actually believe these fantasies yourself; and that’s not healthy.
An old friend of mine runs a relatively small factory in Michigan that supplies capital goods to China. I asked him why China can’t build these contraptions themselves. His answer was that they can’t figure out a basic, but key piece of engineering because they haven’t been able to steal that knowledge.
Sorry IT dude, but everything I said (except, obviously, the anecdote of the convo with my old friend) is easily verified by a little quick research.
Eric Newhill..Troll..China Is Concerned about India..Who is Nuke Armed..Makes Pharmaceuticals and Has Natives..Who Have
HIGH Positions Of POWER..In The Trump
Administration..Society And NetWorking..
JIM
I should have added Japan to the list of capital goods purveyors – S.E. Asian countries have a lot of capital good coming from Japan. There’s a lot of Japanese investment in the region. Also, it’s gone unnoticed/unmentioned by pundits, but Japan’s military has also grown into fairly powerful regional force. Japan is aligned with the US and has a lot of interest in keeping China in check.
TonyL
As we can see here there are ways for Chinese companies to meet Trump’s concerns. From what I recall Trump is OK with such policies.
South China Morning Post: Chinese firms race to open US factories to avoid sky-high tariffs
https://archive.vn/UmPA3
Poul,
Yes (your link). You get it. And that is what I said would happen – and Trump said would happen, but then I’m just a stupid troll and not a Trump hating economics Nobel Lauriat, like of our experts here who said the Chinese would NEVER do that because China most excellently awesome and Orange Man bad! BRICS uber ales! Death to imperial colonizer America! etc. etc.
Faith in BRICS, lol, it’s like this weird leftist mind virus and ignorance of economics combined with wishful, albeit mean, magical thinking that has become a catechism among our America hating trolls. Meanwhile, serious people running nations’ economies aren’t convinced.
Poul,
2024 India exports to US: 79 billion USD.
2024 Vietnam exports to US: 142 billion USD.
2024 China exports to US: 49 billion USD.
Can we guess how long does it take for these exports to be replaced by new factories in US?
TonyL,
Fortune cookie say journey of thousand miles starts with the first step.
But it’s not a thousand mile journey, with will and government clearing the path (no onerous regulation, tax incentives, etc) manufacturing can be established in a year, maybe year and a half.
The alternative is to continue to be reliant on China for key goods. I know you love and trust the CCP, but most of us see a national security issue with the way things are, in addition to domestic policy issues.
Poul, I have to say that your linked article doesn’t start strong:
“Ryan Zhou, the owner of a business making novelty gifts in eastern China”
making. novelty. gifts.
If Trump plans to MAGA!!! by riding the resurgence of “mugs and T-shirt” manufacturing in the USA then it’s going to be a pretty unimpressive greatness.
The main takeaway is a truth buried inside that article:
“But the biggest problem for Chinese firms setting up factories in the US is the lack of a complete supply chain, Li said”
Damn right. China didn’t become the largest economy in the world by keeping its workforce on slave wages. It did so by spending decades taking control of supply chains for all the products that it makes, and by building up the transport network to move those materials and finished products around.
Both of those things have atrophied in the USA, and both need to be built up again if manufacturing is to return to America.
Otherwise the “relocated factories” are just going to be idle because of the inability to supply the factories with the components they need to make a finished product.
Well, except for Ryan Zhou’s factory, since he should have too much trouble sourcing locally-made T-Shirts that he can print his witty slogans on.
Here is an interesting graphic for those who are dismissive of BRICS+
https://substackcdn.com/image/fetch/w_1456/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fac2b4d54-967c-4765-aa6f-2d140c19f11d_952x1178.png
The ten largest economies in the world, which just so happens to include five members of BRICS+ and five members aligned with the USA.
The combined GDP of the USA and its four largest allies sums up to $50.42 Trillion
The combined GDP of the five largest BRICS+ economies sums to $69.36 Trillion
So I’d suggest that BRICS+ is an economic block not to be sneezed at.
And another interesting graphic that shows who has whom as their largest trading partner:
https://substackcdn.com/image/fetch/w_1456/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F55695050-1df0-4293-8815-03344a53d258_583x670.png
Basically, the USA has a headlock on the countries immediately around it (though Trump is going out of his way to piss in the pocket of Canada, not sure that is wise), plus it has a band of trade vassals stretching from the UK through France and Italy.
China is the main trading partner of everyone else.
So if it comes down to a “it’s US or THEM!” ultimatum then Washington can probably be certain that, oh, ten or so countries will side with the USA
The other 180-odd countries on the planet are not certainties, and Trump would probably have to go the full-court press to wrestle a score or so into his camp.
YR,
I repeat, you are living in fantasy land re; BRICS.
First, are you aware that the term BRICS was created by Goldman Sachs as name for bundled financials in developing nations? Then the BRICS countries started using that term to stand up a sort of poor man’s G7.
There is no current talk around creating a BRICS currency. It is merely a forum – like G7 – of developing and often struggling nations, often mutually unfriendly nations. India does not have normalized relations with China. SA has like 33% unemployment, not to mention is the home of a criminal court that would have arrest Putin if he ever went there. Iran is unstable, as is Brazil. India is poverty ridden. Some of the countries are mostly little one trick ponies (energy), like Russia and the recently joined Arab nations. There is no mutual defense pact between the countries and, again, some exhibit some hostility to each other.
This sad shabby economic club is funded almost exclusively by China mostly because China wants to influence countries it wants on its Belt & Road or needs to fuel it. There is no group identity or cohesion beyond the occasional meetings to discuss global economics. India is actually now moving away from BRICS for several reasons, one of which is that China is funding India’s arch enemy’s military (Pakistan). India is increasingly obtaining capital goods and military goods from the west.
Hate to burst your rebellious western hating bubble, but BRICS simply isn’t a thing and there will never be a BRICS currency.
Finally, figures you quote coming from China or BRICS (same thing) should not be trusted. China lies.
YR,
It just dawned on me that you don’t understand the ramifications of the “one trick pony” problem in BRICS (economies tied to oil production).
You don’t want a reserve currency tied so heavily to commodities with unstable prices. That just won’t work. You need more diverse economies and therefore a more stable currency. There are lots of first order, second and third order reasons that are fundamental to comities and reserve currencies.
TonyL
How long until those countries are hit with tariffs?
And they are much weaker than China.
The biggest problem for the US is long-term consistent policy on trade. Trump is gone in four years. He can only get the ball moving in the right direction, but it’ll take decades to get out of the mess the US is in, so future presidents will have to pick up the ball and keep it moving. Who knows if that will happen.
YR
Novelty factories are easy to move it takes more time for car companies etc. But they will come to the US.
The problem for BRICS is that they too will have the same trade balance problems as the US have ended up with unless they clear their curent accounts, say every decade or so. I see nothing in the BRICS model that indicate that will happen.
TonyL,
Do you fly on commercial airlines? You know they have all been in bankruptcy, some multiple times.
Bankruptcy has been part of US law since day 1 because it is something that is necessary in order to have free markets and to allow courageous citizen entrepreneurs to develop enterprises. You want it to be some kind of scarlet letter, a mark of shame. Would you care to see a list of successful Americans who have been in bankruptcy court, often multiple times?
TonyL,
All those countries imposing tariffs on the US for decades do what to businesses in all those countries?
What’s China’s unemployment rate and how many Chinese nationals will become unemployed if their employers can not export to the US?
“crickets”
Fred,
US imports from China has been trending down for quite a while. Where did it go? the Global South.
“China’s exports to developed markets have stagnated for years, but have doubled to the Global South”
“China is exporting less, not more, to the developed markets with which it competes directly, and exporting a great deal more to the Global South, which has virtually unlimited demand for $10,000 electric vehicles, cheap solar panels and broadband infrastructure”
https://asiatimes.com/2024/05/2-words-explain-china-export-surge-global-south/
TonyL,
Iwas unaware Walmart sold evs, solar panels, or broadband infrastructure.
Also from the same article:
https://asiatimes.com/2024/05/2-words-explain-china-export-surge-global-south/
“Remarkably, this grand rotation of Chinese trade – the most significant development by far in the world economy in absolute numbers – has occurred almost without comment by American analysts.
Virtually every policy shop in the United States signed off on a consensus view of China that proved as wrong as any forecast could be wrong.”
So what you are saying is that China is de-industrializing the Global South. If these countries run trade deficits they lose their industrial capacity to China – the same way the US has done.
How long do you think that will be doable. The Global South will hit a wall the same way the US would if they continue down the existing road.
Poul,
No. I would expect the Global South countries will not make the same mistake the US did (destroying own manufacturing industry for short term profit).
Every country has some kind of tariffs that are specific to the type of important products or industry they want to protect. That’s just prudent. But it is complex and time consuming process to determine and negotiate a tariff rate. It has to be effective but not too much.
Trump’s massive tariffs is like an extortion from a Mafia boss. No rhyme or reason. That’s why we have not heard any successful negotiation by any country while
Trump is still bragging “they were coming to kiss his ass”.
True I also think Trump tries too much at once.
But as for the Global South they have a hard limit called debt-financing. As the only way they can buy Chinese goods if they run a trade deficit is by borrowing money. I doubt the IMF is ready to finance trade deficits ditto China.
“As the only way they can buy Chinese goods if they run a trade deficit is by borrowing money. I doubt the IMF is ready to finance trade deficits ditto China.”
China have plenty of US dollars and Treasury bonds to loan these countries. They can pay off the IMF loans and repay China with RMBs later (probably with low interest rate). This actually has been going on with a few small countries. It’s a good way to divest all that funds in countries that they want to have Bell and Road footprints. I don’t know if this is in their grand plan, but I think it is quite clever.
TonyL
This article puts it’s finger on the sore spot for the Global South. It’s the same spot that the US has. The negative effects of China’s economic policies hits everone, not just the US.
https://archive.vn/Nh2AC
““Developing countries have different attitudes about the penetration of Chinese goods into their markets,” Lubin says. “In one sense, they are happy to have access to cheap goods. But at the same time, there is also evidence to suggest that they are getting a bit frustrated with China’s market share in their domestic markets.”
South Africa imposed anti-dumping duties on Chinese steel last year as it battled to save its largest mill. Brazil, Turkey, and most recently India have taken similar measures. Countries such as Mexico, Indonesia, Thailand and Malaysia have also put up barriers on low-value imports such as garments, responding to the entry of Chinese ecommerce giants into their markets.
“Trade imbalances are not just a US-China irritant any more . . . emerging countries including India, Brazil, South Africa, and Turkey are launching trade defence cases to stave off what they see as injurious imports,” Rhodium Group, the research firm, said in March.”
TonyL
How are those countries going to repay China?
THE only way that would be possible is by running a trade (current account) surplus with China. How are they going to do that if they have been de-industrialized by China?
Poul – that sums it up in a nutshell. But it applies to the West too!
Given that the West has run down much of its industry, or in the case of Germany has created conditions in which its industry is uncompetitive, the only way the Chinese will get a real return on what they supply to the West is if the West can run a surplus in services and high tech.
But we’re forcing the Chinese and Russians, the main players, to dispense with our services and high or advanced tech.
They’re increasingly having to find a way to bypass, for instance, the London reinsurance market. In that and a whole lot of other fields, the sanctions are forcing them to set up non-Western alternatives.
Some of the services we supply are maintenance of industrial or consumer goods sold to them – by sanctioning the supply of those goods we also reduce the services we’re able to supply.
In high tech, or advanced Western technology, we’re forcing them to stand on their own feet. Both the Russians and Chinese are perforce having to develop their own aviation industry. In other fields companies such as Siemens, which was really big in Russia, is finding the Russians are starting to develop their own industry for manufacturing railway engines and rolling stock. Once burnt twice shy and the Russians and Chinese will now be seeking to cut their reliance on the West for advanced tech.
One way of getting round the problem you set out is for the Chinese to invest in Western assets with a reliable income stream. The Chinese majority stake in Piraeus is a case in point. That’ll produce a return no matter what. But what use is that if there’s less and less the Chinese can buy with that return? And the possibility of confiscation, or of a forced sale below market value, is always there.
In short, unless there are needed goods and services we can supply to them there’s no point in the Chinese supplying goods to us in the West. All they really need from us or from suppliers under our control is oil, gas and food. But if they can get those from suppliers outside the Western bloc they won’t even need that. So this hits the nail bang on the head when considering the Western countries too:-
“How are those countries going to repay China?
“THE only way that would be possible is by running a trade (current account) surplus with China. How are they going to do that if they have been de-industrialized by China?”
Though one could add that it’s not the Chinese who have deindustrialised us. We’ve deliberately deindustrialised ourselves.
EO,
“Though one could add that it’s not the Chinese who have deindustrialised us. We’ve deliberately deindustrialised ourselves.”
Exactly.
All
It seems China has a HUGE internal tourist industry.
https://www.youtube.com/watch?v=_Nn6C9cHRiE
JLD –
Thanks for that video. I’m a fan of those old Chinese arched bridges like that one over the gorge between the temples. But not sure I’d want to do the 9000 steps to get there.
TTG: “It seems this may be a response to Trump’s meeting with the executives of Walmart, Target and Home Depot where the CEOs laid out the coming effects of the tariff war. They painted a grim picture. Trump apparently listened and announced the tariffs on Chinese goods will come down substantially.”
How odd. Wouldn’t you think that Trump would have had that meeting BEFORE having his brain-explosion on Liberation Day, and not AFTER?
Because if he had that meeting BEFORE he got up to the podium then he wouldn’t have said what he said, and we’d all be the better for it.
Just a thought.
What got Trump’s attention was when many big players around the world started to sell US bonds and they still have plenty of ammo there. Trump has now shown that he will blink if challenged, so don’t expect many concessions from them. As the WSJ editorial board stated: Trump’s tariffs are the worst economic policy ever.
The general public will soon see the effects of this in person and they already don’t like it in the abstract. It will get worse when the obvious arrives. I realize that it will take some time before the realization that Trump is incompetent will sink in among the ones who voted for him and some of them will never get it.
Of course it can get worse and probably will. The good news is that the last time the Republicans tried this, it took 60 years for them to get any meaningful political power. Hopefully, this time, it will not result in a global war.
Lars,
How was the US Treasury sale of 10 and 30 year bonds? “Stellar.”
Which “big players” needed to shore up their liquidity buy selling bonds? Hint: Not China. Whose currency rose because they did so? What does that do to their exported products?
Tell us more, please.
” It will get worse when the obvious arrives. ”
Sure, the “walls are closing in”.
Typically, when stocks go down, bonds go up. That did not happen lately. Thus more people were selling than buying and it was a reaction to Trump’s irrational and erratic actions .
Lars,
Europe sold to shore up their cash position. They are in deep trouble.
Is that why the US$ went down too?
Lars,
Bingo! You are catching on. Euro up $ down. You should look at German pension funds and what they are obligated to buy and why the German central bank, and by extension the ECB, are artificially holding their bond rates low and the impact that will have on pensioners in an inflationary environment.
What you are describing is the old ways. When the US was been de-industrialized.
One of effects of Trump’s policies is the very natural weakening of the US dollar which will result in higher inflation and higher interest rates in the US. Sort of like the 1970’s.
Dollar manipulation has overvalued the dollar significantly. If the dollar drops 30% against the Euro you would not need any tariffs on the EU. Same with the Yuan, Yen etc.
Poul, the US$ isn’t overvalued because of “dollar manipulation”.
Its overvaluation is a natural outcome of it being the global reserve currency, which drives up the demand for the dollar way above any domestic considerations: there are more dollars in circulation outside of the USA than there are inside the United States.
YR
It’s called dollar pegging.
It means China has choosen to follow the US dollar closely. There is a political reason behind such a choice and it’s not for the benefit of the US.
Heavy is the head that wears the crown which is why China will never wear it. Once western rules are applied to them on religion, environmental laws, workers rights the entire thing collapses. China can’t function if the same rules are applied. The only reason they are making progress is due to lack of rules and human rights.
“Once western rules are applied to them on religion, environmental laws, workers rights the entire thing collapses.”
I’m genuinely curious: who do you believe will be applying those things onto China?
“The only reason they are making progress is due to lack of rules and human rights.”
Nope. The China have managed to get where they are because they have spent decades building up their control of the supply chains to feed into their manufacturing base, and to improve their transport infrastructure so that materials can be moved from the mines to the refineries to the component manufacturers to the final assembly factories to the market.
They are the best in the world at both, and that’s why China has made such progress that they are now the largest economy in the world.
Exactly….Correct on All Points Yeh Right…
YR,
Sheesh, get down on your knees for China much?
Eric, you can sit there and do an impersonation of all three wise monkeys if you wish.
I prefer to look around and describe the world as it is.
Yeah,Right ….
I Have a Very Nice 8 Inch Tall..
Very Old Statue of The Three Monkeys
Its Three Dimensional..Full Color
Statue..That Wss Made in THAILAND
Many years Ago..The Bottom Label
Reads Thailand..”Land of Diversity
And Refinement” I Think of People
Like Eric..Who Only Hear ,Speak,
and See..Evil..There Are Many,,,
JIM.
Jim,
Fascinating that you are so defensive of the Chinese government, which is very oppresso liber, right down to creating those social credit scores based on behavior and attitudes exhibited on and off line – yet everyone here gets so upset because Elon Musk might look at their social security info.
The ability to selectively psychologically disconnect in order to maintain a mental construct is truly amazing.
Its ALL market Manipulation..As Usual..
At This Time Wall Street…Is Responding
Almost ONLY..Due To The The Market
Gains of ALL Trump Favored Stock..
From McDonalds..(anything Named Donald)
To All AI flavors.. The SUKE..And All That
Crowd….
JIM
Speaking of Chinese exports, what caused the explosion today in the Iranian port of Bandar Abbas? Was it negligence in handling sodium perchlorate, a precursor rocket fuel, that had been shipped in from China? Or was it Mossad?
Leith,’
Just stupid Iranians being the backwards doofuses that they are. Kayvan tried to sneak in a smoke while on watch and there was a leaking tank. Hassan the electrician didn’t properly apply a wire nut. Who cares? As long as there was an explosion of weapons grade material in an Iranian port, it’s a good day.
Trump’s Tariff War explained in under 80 seconds:
https://www.youtube.com/watch?v=Ugt3j4zdHhc
Forum..Colonel Lang Would Be Writting More about Our HOME Status..and the Treats
To Our Society and ALL The Who,What,Where and HOW..Industry Is Threatened.as..Food Production Farmers Producers..Transport ARE.ALL WEAK..
For Examply..Campbells Soup…Camden..New Jersey..Seems To Have a Supply
Problem..My Chicken Soup Had Some Color..Tiny Carrots..A Few Shreds Of Chicken
If I Were a Major News Reporter..I Would Go Check That Out
Jim and Patrick..
patrick & jim,
I do remember that a truck from Campbell Soup came by the poultry farm I worked on to pick up the hens that were too old to lay eggs. That’s where your chicken soup came from.