Fishing With Hand Grenades...But What is Floating to the Surface?
Martin Jay
Strategic Culture Foundation
Trump’s China plan is like fishing with hand grenades. But what is floating to the surface?—America is heading towards an abyss which it has never seen before and a new all time low of poverty is coming its way.
Trump’s got a lot on his plate at the moment as he wakes up to the reality that you can’t give a radical boost to the U.S. domestic economy at the flick of a switch. The dream of tariffs being able to do this might have been somewhat realistic in the mid 80s when the U.S. imposed a similar radical measures against Japan on electrical goods. Reagan’s thinking at that time was more rational and level-headed and, given that the move to hike up Japanese goods by 100 percent was expected to not even affect the prices of electrical goods in U.S. stores (as there were many U.S. products competing, which were manufactured locally), the move seemed far from radical. But today’s China is not Japan of the 80s.
Trump’s overarching agenda is pretty clear to most economists. He sees Germany, Japan, and China as exploiting their economic relationships with the U.S. He criticizes their trade practices, alleging that currency manipulation and withholding of dollar reserves contribute to an inflated dollar exchange rate, which of course harms the U.S. economy.
The currency manipulation accusation is of course particularly relevant to China whose government barely denies it. But there would appear to be more about this stunt based on geopolitics than meat-n-gravy economics. Even Trump, who doesn’t appear to understand international trade at all, can’t be this stupid. He must have known that hitting China so hard would impact the U.S. economy as the tariffs themselves are imposed on U.S. firms who actually import the goods from China – and so the prices will be hiked in Walmart and other huge retailers. Americans have nowhere else to go for their cheap goods as, in many cases, the items themselves are not produced by U.S. firms. The other consequence of the childish spat with China is that there is an argument that China’s goods may be heading towards the EU on a scale never seen before as compensation.