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Trump Trade War Going Nowhere, Doing Long-Term Harm

Donald Trump’s off-the-cuff, ego-driven trade war with China continues to backfire. Global shipper Maersk says the U.S. is importing more than ever from China:

Soren Skou, the chief executive of A.P. Moller-Maersk A/S, says Chinese exports to the U.S. actually grew 5-10 percent last quarter. Meanwhile, U.S. exports to China fell by 25-30 percent.

…Firstly, the U.S. economy is doing well so consumers there have more money to spend on imports, he said. Secondly, a lot of the really big U.S. companies are hoarding Chinese imports to buy as much as possible before tariffs kick in, he said.

“When we talk to our customers, we hear from many of them that they want to bring in a lot of goods before the end of the year,” Skou said [Christian Wienberg, “Mearsk CEO Reveals ‘Ironic’ Twist in Trade War with China,” Bloomberg, 2018.11.14].

Slightly more manufacturers are looking to move out of China than out of the U.S., and they’re looking to build factories elsewhere in Asia:

Countries in Southeast Asian are the primary alternative locations for firms planning a relocation of all or parts of their supply chains.

Some 72 per cent of the 219 firms polled said they were considering moving supply chain sourcing out of China, while 77 per cent said they would move supply chains out of the US.

Some 64 per cent of all firms, and 70 per cent of American firms, said they would move manufacturing production out of China, against 60 per cent considering relocating out of the US.

…“We see a growing number of factory operators across the Pearl River Delta and Yangtze River Delta, the hubs of Chinese manufacturing, are visiting Vietnam, India and Cambodia to check out the possibility of setting up factories there,” said Stone Xie, a sofa fabric trader from Zhejiang province [He Huifeng, “Trade War Forces Companies to Consider Pulling Operations out of Both China and US,” South China Morning Post, 2018.10.29].

U.S. farmers also face long-term harms, as they did after far smarter Presidents used farm commodities as foreign policy weapons in the 1970s:

…a flashback to Richard Nixon’s 1973 soybean embargo and Jimmy Carter’s 1980 Soviet grain ban suggest that what’s already happened this year may lead to permanent changes ahead as China seeks alternatives to the U.S. market.

Nixon’s move spurred Japan to invest in Brazil’s then-nascent soy industry, setting the Latin America giant on a path to become the world’s top exporter. Carter’s ban was met with trade flow changes that rendered it ineffective and tarnished the U.S.’s reputation as a reliable supplier.

“It’s possible that China will never fully trust the U.S. as a reliable trade partner again,” said Ann Berg, an independent consultant and veteran trader who started her career at Louis Dreyfus Co. in 1974. “They will always be on their toes and their decision to diversify supplies could become a ‘de facto’ import quota for U.S. soybeans” [Isis Almeida, “Trump Trade War Fallout Could Haunt U.S. Soy Farmers for Years,” Bloomberg, updated 2018.11.14].

U.S. farmers are struggling to overcome the mistrust Trump has sown among global buyers and piece together deals to take up the Chinese slack.

Good grief—Donald Trump can’t even do a trade war right. He’s just dragging us into a long, cold economic war that serves no strategic purpose but, much like Trump’s deployment of military resources, only makes Trump feel like a man.

10 Comments

  1. mike from iowa 2018-11-15

    Carter’s heart was in the right place. Nixon and the orange sucker in the kremlin annex didn’t/don’t have hearts.

  2. jerry 2018-11-15

    Whatever happened to those “hordes” of Guatemalans that were invading? We could take those troopers on the border and send them to California to fight the fires and take care of America. trump could call it a trade war to appease his idiot base…ooops, sorry, to call out South Dakotan’s.

  3. jerry 2018-11-15

    Walmart stocks have fallen like the tariff anvils they are attached too. Thankfully there are now Democrats in charge that know math and science.

  4. mike from iowa 2018-11-15

    Caravan reached Tijuana, some of them crossed the border into America and then went back into Mexico.

    So it was reported earlier today.

  5. Debbo 2018-11-15

    The Bloviating Bozo seems determined to wreck as much of the USA as possible in the 2 years, or less*, he has left.

    *Hoping Mueller might have him in convict garb before then.

  6. Roger Cornelius 2018-11-15

    Given this report and others like it, there are still republican soybean farmers out there that believe Trump’s trade war will benefit them in years to come.

  7. Debbo 2018-11-15

    Roger, some will still believe that as the auctioneer comes to sell off all they have outside of the house.

  8. Robin Friday 2018-11-16

    Roger, not a Republican soybean farmer here, but those who will receive the bulk of the so-called bailout, if anyone ever receives it, will be Republicans, and always have been. And they will be mega-corporations.

  9. Jason 2018-11-17

    Robin,

    What crops do you raise?

    You will be paying less taxes Robin because of Republicans. That’s a fact.

    You can always donate to the Treasury if you feel you want to pay more in taxes.

    I bet you will not donate though.

  10. RyanJ 2018-11-17

    I’ve been reading this site for years, but rarely comment. I’m taking the time to comment now to share that I’ve been considering not reading this site in the future. I definitely appreciate an honest debate, but between Jason and OldSnowFlake I’m having a harder time coming back. They do nothing but muddy the waters and distract from what would be an otherwise productive conversation.

    Cory, there’s at least one reader out here that’s had just about enough of the disrupters on this site. Please consider moderation until they can join the rest of the adults in the conversation.

    -Ryan

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