Donald Trump’s trade delegation came home empty-handed from China. The Chinese called the talks “candid and efficient“; the White House called them “frank.” That’s probably code for The U.S. made silly demands, and China told us to jump in a creek:
The US demanded that China cut the trade deficit the US currently has by at least US$200 billion by the end of 2020. In addition, the US demanded that China halt state subsidies for industries under its “Made in China 2025” plan.
Also, it called on Beijing not to take retaliatory trade measures against Washington [Wendy Wu, “The Next Step? After US-China Trade Talks Fail, Trump and Xi ‘May Need to Get Involved,” South China Morning Post, 2018.05.05].
Three demands, three absurdities.
1. Trade deficits take two to tango. If Trump wants to reduce the trade deficit, he could just as easily turn to his base and tell them to quit buying Chinese goods. Heck, if Trump’s ammosexuals will blow up their Yeti coolers over a misread memo on product discounts (memo to gun nuts: the NRA has declared a cease-fire on Yeti), surely Trump could just yell, “F— China!” and his legions would all walk out of Walmart.
2. China’s Made in China 2025 program is the kind of manufacturing upgrade plan you’d expect any sensible nation to make in its own self-interest:
Made in China 2025 is a blueprint for Beijing’s plan to transform the country into a hi-tech powerhouse that dominates advanced industries like robotics, advanced information technology, aviation, and new energy vehicles. The ambition makes sense within the context of China’s development trajectory: countries typically aim to transition away from labor-intensive industries and climb the value-added chain as wages rise, lest they fall into the so-called “middle-income trap.” Chinese policymakers have diligently studied the German concept “Industry 4.0,” which shows how advanced technology like wireless sensors and robotics, when combined with the internet, can yield significant gains in productivity, efficiency, and precision [Adam Segal, “Why Does Everyone Hate Made in China 2025?” Council on Foreign Relations, 2018.03.28].
Putting national self-interest first in the cornerstone of the faint attempts of Trump’s speechwriters to turn Trump’s selfish babblings into coherent foreign policy. Is China’s plan to make more stuff at home any different from Trump’s professed desire to make more stuff in America? If we demand that China drop its Made in China 2025 plan, are we willing to reciprocate by dropping our “Made in America” pretenses?
3. Don’t tariff us; we’ll tariff you. Trump thinks he can ask China, with a straight face, not to retaliate against us for imposing tariffs on their steel and aluminum? Why would any nation not retaliate against such an attack? What does China get from not responding, other than hosed?
Maybe the Chinese could be persuaded to take the economic high ground and adopt this smart anti-tariff view from the Bush Institute’s Matthew Rooney that we can only wish someone would get through Trump’s thick skull:
Tariffs are always a drag on growth because they raise prices and reduce purchasing power. Ironically, import tariffs on industrial commodities like steel and aluminum also act as a tax on exports, increasing the cost of American goods and reducing our competitiveness in international markets. This is true even though our imports of steel and aluminum are a relatively small share of our consumption. Domestic producers will take advantage of the increased price of imports to raise their own prices. And, it is true even if the threatened tariffs ultimately don’t take effect because the uncertainty is already causing producers to rethink their production and marketing plans. As a result, unless the threat of tariffs succeeds in forcing a breakthrough change in Chinese behavior, we can expect job creation, and the United States and global economic growth to continue to weaken over the coming months [Matthew Rooney, “Quick Takes: Tariffs and a China Trade Deal,” George W. Bush Presidential Center, 2018.05.01].
Under Bush, Obama, and Clinton, America was the smart, sensible country who could be counted on to keep the global economy in working order. Under Trump, we are now the anti-globalist bullies making stupid, counter-productive demands. We’re practicing the art of the squeal, not the art of the deal. That’s why Steve Mnuchin came home with nothing to say and nothing to show.
Cory,
Have you looked at the grain prices lately?
Dakota Free Press friend and farmer, Nick Nemec, worst fear came true when China announced last week that they would no longer be buying American soybeans.
The Trump administration has yet to announce alternative markets for soybeans. Brazil will be the big winner in Trump’s trade war.
Good thing for Nick other Countries will be buying US Soybeans.
Nick Nemec told me that the Trump administration has not established alternative markets for soybeans at equitable price China was paying.
Trump screwed the American farmer.
Being the selfish hypocrite that he is, right in the middle of his trade war, Trump has applied for 47 Trademarks in China.
I agree with Cory and the other commenters. Just to add a point about Trump’s lack of knowledge of business. Trump went about this in a stupid enough way that it might signal that he did not want to help the worker at all. He starts with a tariff on steel and aluminum which will put a real squeeze on any manufacturer who uses either steel or aluminum, which is almost all manufacturers. They already had stiff competition from cheap foreign labor and now would have had high input costs on materials. This would have made Chinese imports even more competitive in our market which would have raised the trade deficit. Then when he immediately caved to complaints about putting tariffs on our friends he decided to let cheap steel in from Canada and our European allies which totally eliminated any good effect for the steel industry and its workers because if some cheap steel comes in all steel stays cheap.
Then the big scare of screwing the farmer. China buys a lot of food from us. Soybeans and Pork. The beans they can get from Brazil. So Brazil will have far less beans to sell to its other customers who will come straight to us and buy our beans. The big wheel politicians forget that supply and demand works more effectively than government policy. The only way the Chinese could screw the soybean market is if they decided to quit the second kid per family policy and shoot their extra kids rather than feed them to reduce soybean consumption. This will not happen. Any nation knows the quickest way to turn your own people against you is to not feed them. All the countries that feed their people before will continue to do so. The beans will just come from different ports. As I tell farmers, ‘the food will reach the mouths’. But Pork is a little bit more of a luxury. China is the largest producer of pork in the world so they will not stop eating pork but they might eat a little less and eat a little more of something else. So the pork market might or might not get some effect from all the economic saber rattling.
Over all Trump has caused a lot of trouble and fear which in his opinion makes him the big bully on the block and makes him feel important, but in the end, he has done little good and a lot of bad in price fears and political controversy. We can pray that 2020 comes quickly. Sorry Cory, you can just wish and write. But your writing is good.
Roger E.
Last week Trump delayed implementation of the steel/aluminum tariff another 30 days causing uncertainty in the market for no good reason.
What has completely surprised me about Drumpf is his lack of mocking Chinese stereotypes of slanted eyes and buck teeth. At least not in public.
China has a huge footprint in Africa. China has completed a rail line through Africa. http://www.latimes.com/world/asia/la-fg-china-africa-ethiopia-20170804-htmlstory.html
Now why would China do such a thing on their own, as these African nations are destitute.
China knows that there is a future there with soybeans meat and fuel. In fact, in Africa, soybeans are being heralded as the “Cinderella crop” for substance and for their future food needs as well as for exports. file:///C:/Users/Angela/Downloads/15706.pdf
American farmers may have been taken for granted by trump and the rest of the Russian republicans for sure. When you have the likes of Wilbur (reminds me of Mr. Ed) Ross and the Munchkin doing the deal, you kind of get the feeling that the cat was already out of the bag before these two knuckleheads even opened their pie hole. Now the only thing left is the trademarks that trump wanted in the first place, farmers can go pound sand.
Jason: not at the same price as China. This will hurt farmers.
We should not trade with China. We should funnel our excesses of goods to places inside the United States of America.
Hypocrite Trump loves to trade with China, aside from applying for 47 Trademarks with China, he and his daughter/wife are exempt from the tariff war and can still have their trinkets manufactured in China.
That’s one reason you and I, Mr. C, really abhor Mr. Trump with a vengance. One reason, for me, perhaps the only for you.
That is one of many reasons I abhor Trump, grudz.
It seems that everyday Trump adds one more reason for me to abhor him.
Imagine you sold widgets for $2.00 and you were only allowed to sell one widget per year to your neighbors A but your neighbor A could sell 30 wiggers to you for $1.00 and in addition that same neighbor A sold even more wiggers through another neighbor B to you but put neighbor B’s name on it and there was nothing you could do about it. In addition neighbor A’s government setting the price of the wiggers not the company at a $1.00 and giving neighbor A 0.30 cents for each wigger. Is that fair? That is our trade issue with China folks. The Chinese are flooding our economy with their state funded products undercutting our economy’s incentive to produces wiggers which has resulted in more than 3 million lost American jobs and resulting in reduced wages for Americans. Now I don’t think we actually make widgets and wiggers but we do grow soy and buy auto parts so if you truly understood the trade issue we have with China you would know 1) it hurts your families, 2) suppressing your wages, 3) destroying our infrastructures ability to produce manufactured items in our country.
OS, your hypothetical does nothing to refute the Trump delegations failure to get a deal in China this week.
But let’s play with your hypothetical. Suppose you were selling two-dollar widgets to China. Then your President did something really impulsive and stupid that caused China to stop buying your widgets. When your President sent his negotiators to dicker with China, they didn’t get China to start buying your widgets again. Would you say, “Good job, Mr. President”?
So then, who sent the machinery to China to produce the widgets in the first place, and why were they sent to China? What happens when Africa comes on line with soybeans? Now would be the perfect time to diversify into smaller production farms that are completely organic.
Grudz – the key to operating a successful business is not to OVER PRODUCE – but to produce just the right amount. Pulling that off takes doing some RESEARCH about the market and adjusting production accordingly.
FYI – if you all had been watching PBS the last few days – and its hours-long exploration of Chinese history – you would realize that China has been a global manufacturing powerhouse for 1,000 years. Europe and the US are relative new-comers to this global trade game. Why should we expect to be entitled to out-whiting the older hand? Oh – that’s right – self-absorbed nationalism; deliberate ignorance of the realities of global trade, economics, history, culture, finance and so on. ALL are hallmarks of the typical Trumpist – as well as Trump himself. Vainglorious twerps.
Richard, no one is saying the US wants it all. They are only asking for fair, even trade. What fool truly thinks a car assembled in Mexico/Canada of Chinese parts was actually made in North American? It’s not just China kids. It’s NFTA and China together. Those is major league trade not pony league. Honestly, party here does not matter as this is the first administration to openly confront the unbalanced trade and those that do not support it are either only counting the change is their own pockets or are ignorant of what has been happening.
Sarg – So you’re saying you favor GOVERNMENT REGULATED trade over the free market? FYI – GOVERNMENTS don’t make decisions about what to build/manufacture where or who to trade with. Those are private business decisions, except of course in the case of TRUE fascism – where-in the government is OWNED and controlled by private business interests – OR TRUE socialism – where-in the means of production (business) is OWNED and controlled by the state. Are those the options you favor over the free market?