President Donald Trump claimed last Wednesday that he persuaded 75 countries to negotiate trade and tariffs, leaving China out in the cold. In doing so, he also avoided the bond market disaster. But we have not yet left the forest.
Thousands of American companies, and potentially millions of employees, are still at the forefront of a trade war with China.
The risk of that conflict threatens the entire US economy.
That's not to minimise what the Trump administration accomplished this week, like Bruce Lee, the president took on all corners in a global trade conflict.
In doing so, Trump has taken China out of the hardline that cuts it off not just the US market but also potentially the entire US trade bloc. Whether Trump blocked all the exact movements or simply found his way by applying constant pressure, it worked.
China has been a disruptive player in the global market since it was recognized by the World Trade Organization 25 years ago, not reforming internal politics since the fears of Tiananmen Square.
However, the US and others believed that trade would make China's political system more democratic, as it made China's economy more free. And American companies wanted access to the vast Chinese market and the Chinese workforce.
Initially, trade between China and the rest of the world was mutually beneficial. Many US companies have set up production facilities in China, but Hollywood has found a large new audience for its culture product. American consumers benefited from low prices, and the middle class in China began to flourish.
However, China then began to compete for its trading partner, Capitol. For example, around the world, textile factories began closing, and labor costs in China were not low.
China also stole the intellectual property of Western companies. They advocated to establish Chinese companies that share knowledge as a condition for doing business within the country and compete for foreigners.
China has also artificially kept labor costs low in some industries by using exploitative labour practices – or, in the case of Uyghur Muslims, slave labor. Some US companies have begun to withdraw from China. Others saw no real alternatives to operating the business there.
Meanwhile, China has increased its US public debt, and instead of becoming like America, it leveraged the US, and the US has become like China.
Film studios have shaped their content to avoid angering Chinese audiences. Social media companies have begun to help governments censor critics. And US authorities shut down the economy during the coronavirus pandemic that began in China. Some close their own basic RGHT.
Wall Street JournalWilliam Galston, the only left central columnist of the paper; observation Much of the anxiety about globalization was not a function of trade itself, but a function of the unique challenges that China brought. Traditional economic rules did not appear to have been applied to trading partners who had the power to distort the market on their own.
Hospitalized in the “free trade” system, China attempted to manipulate rules to control trade for its own enrichment and power.
Trump is the first president to recognize China as a partner, rival and perhaps even an enemy. He began a trade war with China in his first term, winning, and began the process of “separation” from China, particularly after the coronavirus.
This process was hard to suppress the media when it emerged, if Trump had not lost to Joe Biden in 2020, if he was a president with corrupt business ties with China through his son Hunter.
Trump later returned to trillions of dollars in American public debt for four years. And he adopted a more aggressive strategy to counter China.
This includes managing key points of the world trade route, including Greenland, the Panama Canal, Gaza (near the Suez Canal), and the Cape of Good Hope, as well as launching an ongoing trade war in which China has retaliated, even as other US trade partners sought negotiation and computing opportunities.
History books and insider accounts need to wait to see how smart the calculations last week are and how many mistakes it is. But Trump's ultimate goal appears to have been consciously to split the world into trade zones and ask his trading partners to make a choice. Or, the democratic free market system in the United States has become flawed and messy, but it may be.
That strategy is progressing well. But it also leaves thousands of American entrepreneurs and potentially millions of workers in employed.
Huge companies like Apple can move production from China to India. For the smallest ones, tariffs are absolutely devastating. Small Mama and Pop stores selling imported goods, small manufacturers using Chinese components in American factories, or Gutsy Inventor They are about to expand production beyond garages.
This week I spoke to an old friend of Rick Waldenberg from his Chicago era. His toy company Learning Resources manufactures educational products that are recognisable from your childhood and children's schools.
When China's tariffs and anti-crime hit this week, he was forced to suspend production and shipping throughout his US and China operations. His tax bill rose from $2.3 million to $100 million to $100 million in 50 (yes, 500).
Rick says that with a 20% tariff, American companies like him got the message. Rick says the message is “die” with a 145% tariff.
Rick's company is a family business that has been around for a century. It employs 500 people, many of whom are in the Midwest. Until now, it has been a solid financial position.
Now Rick told me, he's facing business out of business. And he warned that in the face of that risk, thousands of other businesses in China could have made similar choices that may be less flexible than him. “Contagious effects” may be imminent. It's a cascade of layoffs and closures.
More than a hint of bitterness, he says he was fine before President Trump decided to “fix” his toes. He understands he is on the crisis of bigger economic and strategic issues, but his initial responsibility is the manufacturing heritage, the legacy of clients, 500 employees and families, most of which are heritage in the United States.
Rick has a suggestion. As long as we have suspended the implementation of tariffs on everyone else for 90 days, will China's tariffs not be suspended either? At least long enough for his company to shift production, generating Christmas orders and placing them in the water by July.
Christmas could really be very cold, he points out, if the items that retailers rely on do not arrive at American ports. And we can't make them domestically yet.
Perhaps this is all part of the plan. In fact, whether Trump has decided to stand up now or to entrust someone else with the job, the expected costs of a trade war that may actually be inevitable. But if there is a way to ease that cost, it could offer Trump a political cover-up.
“Christmas Cerez-Fire” – extending a 90-day hiatus on Chinese tariffs to meet Christmas orders – could be a timely and essential rest.
Joel B. Pollack is a senior editor at Breitbart News; Breitbart News Sunday Sirius XM Patriot will be available Sundays from 7pm to 10pm (4pm to 7pm). He is the author of Agenda: What Trump Should Do in His First 100 Daysyou can pre-order on Amazon. He is also the author Trump's Virtue: Lessons and Legacy of President Donald TrumpIt is now available on Audible. He is the winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter @joelpollak.
