Monday, August 26, 2019

US-China: Endgame Has Begun

Donald Trump is determined to cripple China into submission. 

He broke the trade war ceasefire when he announced his decision to impose a 10 percent tariff on an additional $300 billion worth of Chinese imports as of September 01. 

Still, he had to respond to pressure from US businesses and growing fears that a trade war is threatening the US economy, and was obliged to agree to delay – until December 15 – some of the import taxes and even drop others from his tax regime. 

Whatever it is, he left China with no option but to retaliate. 

And so, on Friday, China too, announced it will impose new levies and resume duties on American autos. The Chinese State Council said it decided to slap tariffs ranging from 5% to 10% on $75 billion US goods in two batches effective on September 01 and December 15. Those dates happens to be when Trump’s latest tariffs on Chinese goods are to take effect. 

Additionally, it also mentioned a 25% tariff will be imposed on US cars and a 5% on auto parts and components, which will go into effect on December 15. China had paused these tariffs in April. 

Of course, Trump (right) blew his top and he lashed out at Xi Jinping – on the same day – framing his counterpart as an “enemy”. In fact, one of his many tweets had even declared “…We don’t need China…”. 

Now, calling the Chinese president an enemy, after referring to Xi (left) as a respected friend for the past two and a half years is putting the two countries on a collision course. 

Trump also divulged that he would raise existing taxes on $250 billion in Chinese products to 30% from 25% on October 01. What’s more, tariffs on another $300 billion of Chinese goods, which start to take effect on September 01, will now be 15% instead of 10%. 

As if things are not already bad, he ordered US manufacturers “to immediately start looking for an alternative to China”. And he gamely suggested they bring their companies home and make their products in the US of A. 

In fact, when asked if Trump had second thoughts about his latest move to escalate the trade war with China, Trump said “Yup”. Then he added: “I have second thoughts about everything”. 

Hours later, the White House issued a statement saying that Trump meant to say that he wished he had raised tariffs on Beijing even higher! 

And on Sunday, Trump said he could declare the escalating US-China trade war as a national emergency if he wanted to. Yet, another ominous threat from a president who is nutty as a fruitcake. 

That triggered accusations that he would thereby abuse presidential powers not intended for executive control over commercial decisions  but Trump maintained he would be acting within his rights.

Trump is a loose cannon. And the world waits with bated breath where this is all going to lead to.

I think the US President will not back down – he is going for China’s jugular. He doesn’t want a win-win outcome; he wants China to go on its knees. He wants China to yield. He desires China’s capitulation. 

Not because he hates China. It's all about politics and the country is Trump's bogeyman. He knows that if he gets the better of China, he will win a second term in the White House hands down.

For China, it must not kowtow to the US. I am confident it won’t. 

All of this demonstrates that Trump is just a bully! 

On Tuesday, Trump had trumpeted that Europe had buckled under him. He crowed that Europe will give him anything he wants – “All we have to do is tax their cars”. 

The threat came after Trump signed a deal with the EU on August 02 to boost US beef exports – and which partially relieved American farmers who have taken a big hit from the intensified trade war with China. Annual duty-free US beef exports to the EU are expected to nearly triple to $420 million as a result of the agreement. 

Trump believes EU had acquiesced to him because he had vowed to impose tariffs on imported vehicles and parts from the EU and Japan earlier this year – but had decided to delay the duty for 180 days in mid-May. 

In fact, he is convinced he has them by their tits – and maybe, he is right. I think the EU are nothing more than a brood of hens – and they just don't seem to want to challenge Trump. 

But China is an entirely different ball game. 

And the US-China Endgame has just begun.

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