This report was originally published by Michael Snyder at The Economic Collapse
Nothing is going to be the same after this. On Friday, the United States hit China with 34 billion dollars in tariffs, and China immediately responded with similar tariffs. If it stopped there, this trade war between the United States and China would not be catastrophic for the global economy. But it isn’t going to stop there. Donald Trump is already talking about hitting China with an additional 500 billion dollars in tariffs, which would essentially cover pretty much everything that China exports to the U.S. in a typical year. The Chinese have accused Trump of starting “the biggest trade war in economic history”, and they are pledging to fight for as long as it takes. As I discussed yesterday, the only way that one side is going to “win” this trade war is if the other side completely backs down, and that simply is not going to happen. So there is going to be economic pain, and that pain is likely to intensify for as long as this trade war persists. U.S. businesses that will be affected by foreign tariffs are already cutting back production and laying off workers, and CNN is reporting that 1,300 products have suddenly become more expensive for U.S. consumers. There will be nowhere that anyone can hide from this trade war, and it will ultimately affect every single man, woman and child in the entire country.
Most Americans are not paying any attention to these ongoing developments, but the Chinese sure are.
Earlier today, the Chinese Ministry of Commerce called the U.S. tariffs “typical trade bullying”, and it warned that this trade war could trigger “global market turmoil”…
“This act is typical trade bullying,” the spokesperson said, before adding: “It seriously jeopardizes the global industrial chain … Hinders the pace of global economic recovery, triggers global market turmoil and will affect more innocent multinational companies, general companies and consumers.”
China’s primary English language newspaper was even more direct with their criticism…
The government-run English language China Daily newspaper said: “The Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China.”
Here in the United States, the start of a major trade war with China really doesn’t seem like that big of a deal if you listen to the mainstream media. Most people just seem to think that things will continue to go well for our country no matter how many stupid decisions we make. It is almost as if a lot of Americans no longer understand that extremely reckless acts can have exceedingly severe consequences.
One man that understands what is happening is the founder of the largest hedge fund on the entire planet. On Friday, Ray Dalio posted the following ominous message on Twitter…
“Today is the first day of the war with China.”
Today is the first day of the war with China.
— Ray Dalio (@RayDalio) July 6, 2018
Please note that he did not say “the trade war with China”.
The truth is that trade wars can often lead to shooting wars, and we need to hope that cooler heads will prevail.
But for now, it looks like things will continue to escalate…
But Trump has said his administration will respond to retaliation from Beijing with much bigger waves of tariffs, raising the prospect of worsening tit-for-tat reprisals. On Thursday, he suggested the possibility of tariffs on almost $500 billion more of Chinese goods.
He described the potential escalation to reporters aboard Air Force One: “Thirty-four, and then you have another 16 in two weeks and then, as you know, we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. OK?” Trump said. “So we have 50 plus 200 plus almost 300.”
If we hit China with 500 billion dollars in tariffs, there is no telling what the Chinese might do.
As I discussed the other day, the Chinese could start dumping our debt or cut off our access to rare earth elements.
Either move would be absolutely catastrophic for the United States.
We don’t know how this trade war will ultimately end, but as Reuters has pointed out, “it’s going to get ugly”…
The U.S.-China trade war will be fought in the trenches, and it’s going to get ugly. The first round of tariffs hits on Friday, and U.S. President Donald Trump says they might come to cover more than $500 billion of goods. Exporters will feel the pain first, but uncertainty will also dampen investment, impede research and twist reform. It marks a moment of mourning for those who hoped the world’s two largest economies could work things out.
And guess what?
Russia just joined the trade war against the United States as well. The following comes from Zero Hedge…
Whether this is a coordinated response is unclear – and certainly on a much smaller scale – but Bloomberg reports that Russian Prime Minister Dmitry Medvedev signed a decree this morning imposing higher tariffs on U.S. products in retaliation for U.S. duties on metals imports, according to Economy Ministry statement.
Reuters reports that Russia’s additional duties will apply to imports of fiber optics, equipment for road construction, oil and gas industry, metal processing and mining, according to an economy ministry statement.
These tariffs are going to have very real consequences for U.S. businesses and U.S. workers.
Even though this trade war just started, some firms are already being hit very hard. Here is one example from USA Today…
Trans-Matic, of Holland, Michigan, shapes metal, mostly into auto parts, as well as components for door locks. It has paid higher steel costs for several months as U.S. steelmakers raised prices in anticipation of higher American tariffs on metal imports, company Chief Financial Officer Steve Patterson says.
Trans-Matic has passed along the price hikes to its auto-supplier customers, but some have scaled back orders, reducing Trans-Matic’s revenue in that key sector by 5 to 10 percent, Patterson says. As a result, the company is giving its 300 U.S. employees about five hours a week in overtime instead of their usual 10.
For other firms, layoffs have already become a reality. Just ask the largest nail maker in the United States…
In Poplar Bluff, Missouri, Mid-Continent Nail, the nation’s largest nail maker, laid off 60 workers last month. Sales plunged 70 percent after Trump placed a 25 percent tariff on steel from Mexico and Canada. When the company boosted its prices, customers defected. Now, Mid-Continent is strongly considering a second round of 200 layoffs, company spokeswoman Elizabeth Heaton says, and all 500 employees could be axed by Labor Day.
The longer this trade war lasts, the worse things are going to get.
Fighting a trade war just with China would have been bad enough. But instead, we have decided that we are going to take on pretty much the entire world simultaneously, and I don’t know if I have the words to describe how painful that is going to be for all of us.
Many Americans seem to believe that the U.S. economy is an unsinkable ship, and at this moment we are heading directly for an absolutely enormous iceberg.
Let us hope that someone is able to pull a rabbit out of a hat, because right now things are looking quite bleak.
Michael Snyder is a nationally syndicated writer, media personality and political activist. He is the author of four books including The Beginning Of The End and Living A Life That Really Matters.
Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream.
If you want to know what is coming and what you can do to prepare, read his latest book [amazon text=Get Prepared Now!: Why A Great Crisis Is Coming & How You Can Survive It&asin=150522599X].
Bring it on, Kung Fu.
We, Americans, need absolutely NOTHING from China. Nothing.
There is not a product we don’t, or can’t, manufacture ourselves. Not one. We don’t even need to import a single product from China. China is a bloated turd world dump living off of Wal-Mart.
THEY need us, especially with the Solar Minimum having arrived, and the dropping in Global temperature (Global Cooling). Within 2 years, China will not be able to grow wheat, rice or corn. They know it. It is why they have encouraged the North Koreans to do what TRUMP says, since the coming starving 22 million North Koreans would head North into China…..and China will not be able to feed them.
China, like the rest of this pathetic World, needs America. We are the ONLY country that has the land, oil, coal, natural gas and resources, and intelligence (Sufficient White Men), to grow the food that is going to be needed in the next few years to stop horrific starvation. Only America.
Don’t believe me? Just wait till this Winter to see it for your self.
Totally Agree Centurion. It has come to the point where you can purchase frozen shrimp at the local “family dollar” store, which were locally raised and fed with human excrement in said asia. No Thank You. Rather have it grown domestically.
truth is, all governments conspired to create this mess so they can TAXFUCK us.They just can’t steal enough of our money, not to mention our kids, grandkids, great…etc.
Me too big buddy. you wanna get some thai food and go to town on each other toniught? i got a full bottle of Jungle Juice and ballz fulla jizzzygoodness!
Who is this ‘person’ posting under my name? You’re wrong for it.
You don’t hold the rights to any name. Maybe Mel Gibson and or Hilary Clinton would object to you stealing their words?
Anyway, he/she is using the nomenclature “Braveheart” – once again your reading and comprehension skills leave a lot to be desired.
The games that governments play.
Seems either way we go we get screwed. We lost the ability to self sustaining. we lost millions of jobs overseas in exchange for cheaper goods or we pay more,lay off people and damage the economy. china and others will dump the dollar and it will end up useless. Not looking good.
Economic pain is coming one way or the other. It is baked in as they say. We are printing up 1 trillion per year. Only way to sustain is to keep printing or stop and let the chips fall where they may, but someone’s feelings are going to get hurt. No way around it.
Chill out, Snyder.
Everything will be OK.
It’s not like Trump put a freeze on Chinese imports. It’s not like Wal-Mart was turning into FEMA Camps. You’ld think we had been taken over by (((aliens))) or something.
So what does Mr. Snyder or anyone for that matter suggest we do. Nothing? Keep buying the lopsided Chinese shit? Something is wrong with the American scenario. What is the answer? How do we get Americans back to meaningful, well paying jobs? Between stupid housing, health insurance, and auto prices, I really don’t how the people are doing it. Unless many are just up to their eyeballs in debt. I see major inflation on deck for us if we really want our fellow citizens making goods again.
Many are over their eyeballs in debt and they’ll die that way and pass their debt onto their children.
Downplaying and over simplifying, B from CA, you come across as a liberal. A passive-aggressive liberal.
Complexity is usually a sign of confusion and error. Truth is simple.
About me: I am neither liberal nor libertarian. I think I am a free thinker.
I can be passive, very aggressive, or passive aggressive as the situation requires.
But, enough about me. What’s your problem, anonymous?
B, you tell him. Me thinks anonymous is confused.
We’ll have unemployment.
They’ll starve. Literally. By the hundreds of thousands at least.
Guess who’s going to flinch?
Will people stop saying this is a “War with China” This is a war with all the AMERICAN corporations that sent you’re jobs to China for GREED!!! Everything they send back to sell to you is now an import and subject to the tariffs.
How much more will the dollar fall before it is worth nothing? Inflation has already jacked up food and housing costs to absolutely ridiculous levels in a short timespan. This won’t end well as WW3 inches closer.
The author is full of fear. We couldn’t go on like we were forever no matter how much the globalists would try to convince us otherwise. Maybe this will reverse our course of buying so much disposable junk.
And some things that really shouldn’t be treated as disposable, for instance, clothing. Too much plastic ware to enumerate but is often never worth the price paid.
Fear sells, and that’s what this site has become.
Way before the income tax, the US got the bulk of its operating money from tariffs. Maybe it’s time we went back to that system and got rid of the income tax.
Tariffs encourage domestic production and domestic consumption. It will be better in the long run.
It might also mean the gov must stay within a budget.
China only needs to unload their trillion in US treasuries on the market…that’ll learn donald to mess with the dragon.
I am ALL IN.
I do not paying a little more for anything made in the USA.
And J. Diamond keeps the mark artificially green. If people only opened their eyes.
It sounds like the read fear mongering is coming from the ones who are against THEIR personal comfort being interrupted. Nevermind that the less than 50year old crowd of Americans has been completely SCREWED to pay for that presumptuous comfort. Somebody has to face the music for this idiotic borrow-until-we-die mentality we are stewing in right now. And the cut off for which way a person feels about this is right around my age. We are the ones who never made as much as our parents, yet paid our entire lives for social security WE are NEVER going to get! We are the ones who have been SACRIFICED by the baby boomers in a trade off for their ability to keep receiving their token crumbs. Those crumbs are more important than the future of their children and grandchildren, whom will be debt slaves their entire lives. Those crumbs are more important to them than their own education and participation on a lucid level in discussing the REALITY and our future. Is it any wonder that these people are also insisting that the rest of us be forced to be the slaves to the entire world, allowing EVERY OTHER COUNTRY to take advantage of us and rape us whichever way they please, on demand?! These are the people who ignorantly promote foreign wars and dont give a dam about our soldiers coming home to homelessness, misery, pain, and often suicide. These are the people who ignorantly dont care that THEIR foreign policy disasters have created a world where everybody hates US-and WE HAVE TO LIVE IN IT, not them! All the so-called Americans who are against us having RESPECT AND A FAIR TRADING FIELD going forward, are trying to steal even more from the younger generations because WE WILL BE PAYING FOR EVERY ONE OF YOUR SELFISH DECISIONS! And we ALL know it! Unlike the comfortable, selfish boomers, WE prefer to bite the bullet so that OUR CHILDREN AND GRANDCHILDREN DONT HAVE TO! How is that so hard for you people to comprehend?!
USA has been living on Chinese credit for 20 years. It is impossible to repay. USA cannot pay its’ current purchases, even on a day to day basis. Trump (or at least his advisors) realise this. The only way to default with any semblance of ‘honour’ is to find a reason to blame the victim. “They made me do it.”
The idea that a trade deficit is the fault of the seller is so stupid that only a brainwashed populace could possibly believe it.
20 or 10 or even 5 years ago the US could bully China and possibly win concessions. Today China can quite easily tell US to go kick rocks. In fact it may serve China to do so. The ‘Party’ may well be looking to bring some financial control and austerity to the market, worrying over the idea that the Chinese billionaires may become the Oligarchs or robber barons of Russia and industrial USA. The Oligarchs and Barons feel that the way to safeguard their wealth is to ‘take over’ the politicians. (as in 1990 Russia and today’s USA)
USA will lose and lose badly. The loss will be in the quality of life of the ordinary person. The ‘owners’ of industry and retail will merely pass on the additional cost to the consumer who will be left with less choice at a higher cost. (like the owners care)
It has to happen some time, the USA cannot continue to bully the rest of the world into subsidising their lifestyle on credit.
The young people will suffer for many years to come whilst the old-timers will find that their retirement is short and miserable.
Sorry to be such a Pollyanna.
I wouldn’t call you a Pollyanna, not by a long chalk. More a Cassandra.
And, like Cassandra, your prophecies will be ignored by American naysayers who still believe that their country can whop any Johnny Foreigner because “we’re Americans!”
Sadly that bellicosity is not evidenced by America’s recent military adventurism. You cannot fight and win guerilla wars without lots of boots on the ground.
And anyway, would you trust and follow a draft dodger?
When “Experts Warn”, you can generally make good money by doing the opposite.
When “CNN Reports”, you can make good money betting that they are spewing propaganda.