This report was originally published by Michael Snyder at The Economic Collapse
It is difficult to find the words to describe just how serious America’s trade war with China is becoming. As you will see below, the two largest economies on the entire planet are on a self-destructive course that almost seems irreversible at this point. The only way that this trade war is going to come to a rapid conclusion is if one side is willing to totally submit and accept an extremely bitter and humiliating defeat on the global stage, and that is not likely to happen. So in the short-term, and probably beyond that, we are going to experience a tremendous amount of economic pain. In fact, if one wanted to create a recipe for economic disaster, it would be hard to beat having the Federal Reserve dramatically raise interest rates at the exact same time that the U.S. government is starting trade wars with all of the other major economic powers simultaneously. Unless something drastically changes in the very near future, there is no way that the U.S. is going to be able to get through this without experiencing severe pain.
Many had hoped that President Trump would settle down after the initial salvos in this new trade war, but instead on Sunday evening we learned that he has decided to go nuclear. The following comes from CNBC…
President Donald Trump plans to bar many Chinese companies from investing in U.S. tech and to block additional technology exports to China, The Wall Street Journal reported on Sunday evening, citing people familiar with the matter.
The two measures are set to be announced by the end of the week, and are intended to counter Beijing’s Made in China 2025 — a Chinese initiative to be a global leader in technology.
A report from Reuters included some additional very important details. Apparently this new plan would ban any firm that has 25 percent Chinese ownership or greater from investing in any U.S. companies that have “industrially significant technology”…
The U.S. Treasury Department is drafting curbs that would block firms with at least 25 percent Chinese ownership from buying U.S. companies with “industrially significant technology,” a government official briefed on the matter said on Sunday.
So we are not just talking about “tech firms”. The Trump administration is greatly concerned about Chinese theft of our technology, and without a doubt this has been rampant, and so the goal is to keep the Chinese from investing in any more of our companies that have important technology.
And theoretically that could include nearly all of them.
For years, the Chinese have been pouring massive amounts of money into the United States and have been investing very heavily in our industries. Now that is going to come to an almost full stop, and the consequences are going to be enormous.
Yes, we certainly need to stand up to China, but it sure is going to be nearly impossible to try to replace all of that Chinese investment from other sources.
And of course this latest announcement comes less than two weeks before the U.S. and China are scheduled to begin imposing massive tariffs on one another. The following comes from Bloomberg…
On July 6, the U.S. is set to impose tariffs on $34 billion in Chinese goods. Tariffs on an additional $16 billion in Chinese products will go into effect after a public review period is completed. When Beijing vowed to retaliate on the same amount of U.S. goods and under the same timeline, Trump directed his U.S. Trade Representative to identify an additional $200 billion worth of Chinese goods that could be subject to a 10-percent tariff.
Donald Trump is playing hardball with China and is betting that they will fold.
I can already tell you that the Chinese will not fold.
So we are going to suffer some pretty severe consequences, and Finian Cunningham detailed some of these in a recent article. First of all, Chinese tariffs on our agricultural products will likely hit our farmers really hard…
If China goes ahead with threats to impose counter-tariffs on US agricultural products, such as soybeans, corn and meat, the impact on farm states like Iowa, Idaho and Illinois across the mid-west will be severe. Voters from these states were crucial to Trump getting elected to the White House in 2016. By taking the US into a trade war with China, Trump will end up hitting his own political base hardest.
Secondly, U.S. consumers will begin seeing significantly higher prices for consumer goods at our major retailers…
Another repercussion is higher retail prices for consumer goods like televisions and footwear imported from China, if Trump slaps on punitive tariffs. That will inflate consumer prices and crimp household budgets, especially among the lower-income population, who again tended to vote for Trump. Net result is that the fragile American economy would likely tank from cash-strapped consumers, who are already living on the edge.
Thirdly, if the Chinese decide to start dumping U.S. Treasury bonds that could create a new crisis on Wall Street very rapidly…
Yet, in this accounting, the real pain hasn’t even begun. China’s ultimate trade weapon is its massive holdings of US Treasury bonds. With nearly $1.2 trillion-worth in holdings of US federal debt, China is by far the world’s largest creditor for Washington. US-based news outlet Bloomberg calls it Beijing’s “nuclear option”.
Let me throw in another factor that I mentioned in a previous article. China has a virtual monopoly on the production of rare earth elements, and if they totally cut us off they could almost instantly cripple a number of our high tech industries. We have plenty of rare earths here in the United States, but we have not developed our mining or production capabilities to anywhere near a sufficient level for our needs. This was a ghastly national security error, and in the short-term it could mean an absolutely immense amount of pain.
On top of everything else, China appears to be gearing up for a currency war. It is already being said that the Yuan is being “weaponized”, and if the value of the Yuan continues to fall precipitously it is going to cause a tremendous amount of chaos globally.
So keep an eye on China and on the Chinese financial markets, because big trouble is already brewing…
A slew of negative factors — from a trade war with the U.S. to the risk of a credit crunch — has weighed on China’s financial markets in recent weeks. The benchmark Shanghai stock index is on the brink of a bear market after tumbling almost 20 percent from its recent high, while analysts have started cutting their forecasts for the nation’s currency. Investors have been piling into the relative safety of government debt instead.
“The yuan is faced with a double whammy –- escalating trade tensions are hurting sentiment and the easier monetary policy is also pressuring the currency,” said Gao Qi, a currency strategist at Scotiabank in Singapore. “Traders will step up shorting the yuan in the offshore market, but we won’t likely see massive fund outflows considering the capital curbs in place.”
As one surveys the current state of the global economic chessboard, it is easy to see that we are just two or three moves away from a major global economic crisis.
Just like in 2008, that could mean dramatically falling stock prices, surging corporate bankruptcies and millions of Americans losing their jobs.
And this time around, we could be facing much higher prices and a greatly reduced standard of living.
We are way overdue for the next great economic crisis, and now the powers that be seem absolutely determined to bring it on.
Anyone that is optimistic about the global economy in light of these most recent developments is simply not being rational, because we have never seen storm clouds this big on the horizon in all of modern American history.
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].
THE SKY IS FALLING! THE SKY IS FALLING!
(again this week)
Snyder….same tired doom and gloom, different title
Stuart, that Peter Schiff guy had a similar article on here earlier. Are those two related?
“For years, the Chinese have been pouring massive amounts of money into the United States and have been investing very heavily in our industries. Now that is going to come to an almost full stop, and the consequences are going to be enormous.”
The consequences will be enormous for China who will be stopped by TRUMP from stealing American Innovation.
“Yes, we certainly need to stand up to China, but it sure is going to be nearly impossible to try to replace all of that Chinese investment from other sources.”
LMFAO !!! Impossible to replace Chinese Investment Capital ??? BS !!! (This is why Michael Snyder is a lawyer, not a banker. Michael I hope you win a seat in Congress, we need you there !!!)
The USA is AWASH in investment capital. There is never a (real) shortage of capital in a system that is based upon fractional reserve banking and debt.
I know because in college I wrote a paper predicting a shortage of capital for investment in the Third World Emerging Markets in the 70’s.
I apologize. I was young and dumb. 🙂
“China has a virtual monopoly on the production of rare earth elements, and if they totally cut us off they could almost instantly cripple a number of our high tech industries”. This statement is just more B S, the U.S. has lots of rare earth elements, but because of the tree huggers and EPA rules we can’t mine them. Get those assholes out of the way, we can mine more then enough rare earth elements to fulfill all our high tech needs.
Oh please don’t throw me into that Brier patch.
Compared with what’s coming the trade war is pissing on a sidewall compared to a hurricane/
If you ain’t got much you ain’t got much to lose. If you have some you want more. If you are rich you want it all. Enough is never enough. Money is God and people suck. Where do I pick up my pay?
I quit posting here a 1.5 years ago as admin was cherry picking posts. But I will today. So, China and Mexico and others have been robbing us blind And are used to it. A slow path to destruction for us economically. And now we have a non democrat, sissy, weasels and a guy named Trump a guy that refuses to be cucked on imports/exports somehow everyone goes batshit crazy we are headed to destruction. So China is known to rip off all our tech and even open Apple stores that are not Apple but these idiots all are ok with no tariffs in an effort to send a message. So let me get this straight, a businesses largest customer says he wants a fair discount that the smallest customer gets And the business owner says hell no, matter of fact every time you buy I will add a penalty to your order, you will now pay more. What do you think that customer will do. We are China’s largest customer hence a trade deficit, we buy a shitpile more from them than they do from us. And they want to threaten us and everyone is batshit crazy our economy is gonna fall apart. Have you all completely lost your marbles. Seriously. I fell our steel, aluminum etc costs more because we are paying Americans to make it in businesses here that pay tax we are literally making our economy stronger and the higher your cost the more inflation goes up the higher your wage growth. Of course to a certain degree then it’s bad. I understand economics trust me. Either way it puts demand for local supply and more workers creating jobs. Then once China et all understands Trump will be here 2 terms watch them cave. The democrats are ruining things making the world believe he’s gonna be impeached or not re elected so don’t capitulate or negotiate with him hoping he fails. Hoping America fails. They just want more voters imported in. They want unbridled power to make you a slave. Obama ran around the globe before every Trump national visit to deter world leaders from listening to him. He is in complete breach of the Logan act. So is John Kerry and both should be jailed. When Trump wins big this November in congress and again for a second term in 2 years watch how fast the world takes a knee and says please sir may i have another……..watch for DOW 40,000 and all the bears and doomsayers twitch that the end is now even closer. Why? Well, because it’s higher. That’s why and well it must crash. They just delay their righteousness until decades later they claim to be right…..
The Chinese play chess and the US plays poker. They have had 5000 years of business and we have had 200 years. I do not think we have a chance. I support Trump but I don’t know about this trade war.
Everybody bitches about the countries taking advantage. Trump puts his money where his mouth is. All of the sudden the left and right are in a tailspin. Can’t have it both ways. The cheap Chinese crap we buy is artificially low and at the expense of your fellow American’s job. These wars mean inflation. Get used to it or continue down the same road as the last 30 years. There will be no gain without pain. Things cannot be undone without there being many casualties. We are faced with where the rubber meets the road. Or we go back to how it was. No one works and we continue to add $1 trillion/year to the debt. We are screwed at every turn.
“The cheap Chinese crap we buy is artificially low and at the expense of your fellow American’s job.”
“…The Federal Reserve raise interest rates at the exact same time the US government is starting trade wars…”
So, how do you like being at the mercy of Rothschild’s Private Banking Cartel?
England and the monarch’s of Europe fell to the power of compound interest. America freed itself from the English monarch, King George, not his banker. Rothschild still has us United States by the hairs. We are economic slaves. President Jackson gave us sixty years free from economic bondage. President Jefferson previously had refused to renew the Charter with Rothschild’s Central Bank in London. Rothschild responded by starting the war of 1812.
The Chinese do need their little small yellow chickens smacked and smacked hard for so many reasons!!
Well, the Petro Yuan had 12% of the oil market after only 7 or 8 weeks.
We are seeing inflation in food and gas prices. Retail is still imploding.
Country after country is ditching the dollar.
Russia dumping our treasuries. China not buying them.
Multiple shockwaves are heading this way.
Heed the warnings and get ready for impact.
Nothing to stop it.
Did America suffer when both Russia & China were communist ??? They didn’t hold dollar denominated securities then, did they. The Rooskies recently sold half of their dollar holdings …. it didn’t even make a blip on the Bond Market Radar.
The Chinese still hold about $1.2 TRILLION dollars in US Treasuries. That’s a drop in the bucket of the US Bond Market.
LMFAO !!! 🙂
Agreed 100$ DK! This is nothing but fear porn, something this site keeps posting. THAT is why people are leaving…
You won’t be LYFAO when the Petro Yuan has about 25-35% of the oil market.
Bond market is propped up by,……..oh yeah, The Fed.
If the bond market was not propped up by The Fed we would be in deep excrement.
Foreign debt holders are becoming fewer. That is a fact.
This is no longer the SHTF blog site…it is Michael Snyder’s Apocalypse porn site. Every week or so Snyder has a post about “something about to happen”…which is why I stopped coming here, only checking once a month for so . It is getting VERY repetitive.
Seriously…does Snyder copy notes from one post to another only changing the title?
Top 10 Snyder catch phrases:
10. Something about to happen
9. What they dont want you to see
8. Going nuclear
7. Economic collapse
6. Beginning of the end
5. Will you survive
4. Are you prepared
3. UN troops preparing
2. We are in the end times
…and the #1 Michael Snyder doom/gloom catch phrase…
1. They’re preparing to take our guns
Go away Michael…your schtick has gotten old.
I agree with Mr Snyder on the following:
“Donald Trump is playing hardball with China and is betting that they will fold.
I can already tell you that the Chinese will not fold.
So we are going to suffer some pretty severe consequences, and Finian Cunningham detailed some of these in a recent article. First of all, Chinese tariffs on our agricultural products will likely hit our farmers really hard.
If China goes ahead with threats to impose counter-tariffs on US agricultural products, such as soybeans, corn and meat, the impact on farm states like Iowa, Idaho and Illinois across the mid-west will be severe.
Voters from these states were crucial to Trump getting elected to the White House in 2016. By taking the US into a trade war with China, Trump will end up hitting his own political base hardest.”
Yes, she is worse but Trump isn’t much better. He is not going to MAGA.
Anonymous, China won’t do squat because they NEED those agricultural products to feed their own people.
I knew it was another cry wolf M Snyder article.
Btw/ Israehell steals US Military technology and sells it to China. Need to go to the cookie Jar and see whos hand are in it. Time to end ALL DUAL CITIZEN PASSPORTS AND NO DUAL CITIZENS CAN HOLD ANY GOVERNMENT POSITIONS PERIOD. WE ARE BEING ASSRAPED BY ISRAEHELL DAILY IN INTELECTUAL PROPERTY THEFT. IT HIGH TIME FOR OPEN DISCUSSION OF THUS FOREIGN ENEMY IN OUR HOUSE RIPPING US OFF.
“I can already tell you that the Chinese will not fold.”
Wrong. And I have a Franklin to support my position. The Chinese will fold or be destroyed economically. TRUMP is the one who will not fold and he is holding ALL of the cards.
In a TRADE WAR China loses badly. They will capitulate to save their regime. A TRADE WAR would destroy the Chinese Economy and the Masses there are now pampered Snowflakes who will go nuts as the economy collapses under its own weight of debt as it spirals down !!!
The Communist Party can only build so many ghost cities to keep the population working. It is an export oriented economy.
TRUMP will CRUSH China. 🙂
And since America does not make squat anymore, thanks to “free” trade agreements,
we need what is in those cargo containers. The manufacturing base is gone.
And since the US economy is about, or over 70% consumer-driven…….
Trump wants to use tariffs to crash everything. Then he wants the Federal Reserve gone.
God bless him if he does get rid out them. Maybe that is why they are trying to kill him.
The old free trade agreements are part of the central bank system he wants gone.
It’s a dangerous game to see who will capitulate first. China will make concessions.
We are going to feel some real pain before things turn around. There will be a reset.
They have Belt & Road in motion to pick up more consumers in other parts of the world.
Untapped consumer markets in Eurasia and everywhere else. Emerging markets.
They have amassed huge quantities of gold.
When Arab nations en masse accept Yuan for oil, we get smaller and China gets bigger.
CHINA doesn’t produce enough food to feed its people. CHINA NEEDS our stuff much more than we need theirs. Man you people needs to pull your heads out of your asses! I would gladly pay more for goods made in AMERICA, create more higher paying AMERICAN jobs than buy cheap chinese garbage!
Snyder is wrong again.
Nobody believed that Fat Boy would play nice, even for a minute, but he did.
So China will find it in their best interests to give in so that they can keep their largest market intact.
We are Chinas largest customer. They will notcut off their own nose to spite their face. They will threaten and saber rattle. But in the end they will pay the tariff in order to be able to do business in the USA. Snyder is just a Doom and gloom clown. The USA still has the dominate military force in the world. That assures us that we can dictate what we want to do with our own stuff.
No No No
Trump has the Golden touch – do not bet against him
Those who do lose
Have faith brothers – We need to go to war with the liberal American haters.
They are the most dangeous thing we need to concern ourselves with.
You been saying the same thing for years, Snyder, you’re nothing but a broken clock!
FYI and FWIW
China recently granted the first daughter’s privately owned company final approval for its 13th trademark in the last three months, trademark office records show. She also holds patents in China for her clothing and shoe line.