This report was originally published by Michael Snyder at The Economic Collapse
Can the global financial system handle a full-blown trade war between the two largest economies on the entire planet? We have never seen anything like this happen in the modern age, and this is creating a tremendous amount of uncertainty for the financial markets. Yes, something had to be done, and I have been writing about this for years. China has been stealing our intellectual property, manipulating currency rates and slapping high tariffs on American goods. We simply could not allow China to continue to take advantage of us, but now we are so dependent on the Chinese that a trade war with them is going to inevitably produce a great deal of pain. We are all going to wish that another way could have been found to resolve this crisis, because in the short-term this is definitely going to hurt the U.S. economy. And if President Trump chooses to press forward with trade wars against Europe, Canada and Mexico at the same time as well, the pain for our economy is going to be off the charts.
Most Americans didn’t even notice, but Donald Trump fired a shot that was very clearly heard all the way over in China on Friday when he slapped a tariff of 25 percent on 50 billion dollars worth of Chinese products…
China accused the United States of firing the first shot on Friday when the White House said that it would impose tariffs of 25% on $50 billion worth of Chinese goods.
The announcement confirms a threat first made by President Donald Trump in March and follows months of trade talks between the two sides. A truce was announced in May, but it proved short-lived.
“The United States has kept changing its mind and now launched a trade war,” China’s Commerce Ministry said in a statement.
The Chinese retaliated almost immediately by slapping a 25 percent tariff on 50 billion dollars worth of our goods…
China will slap hefty tariffs on U.S. goods in retaliation for President Trump’s decision to levy duties on $50 billion worth of Chinese imports.
Beijing will impose an additional 25 percent tariff on a total of 659 U.S. imports worth about $50 billion, according to a statement on the country’s Ministry of Finance website.
The first batch of tariffs will hit 545 U.S. products worth about $34 billion, including agricultural products, such as soybeans, corn and wheat, automobiles, beef, pork and seafood, and will start July 6.
President Trump took the weekend to think about it, and on Monday he decided to raised the stakes much higher.
If the Chinese really do go ahead with their tariffs, the Trump administration is going to hit them with a 10 percent tariff on another 200 billion dollars worth of their goods. The following is from Trump’s official statement…
This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance in goods. This is unacceptable. Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States.
Therefore, today, I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent. After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced. If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods. The trade relationship between the United States and China must be much more equitable.
If China does not match each round of tariffs they will look weak, and if Trump does not keep raising the ante every time China matches him then he will look weak.
So where will this end?
Ultimately the goal is more balanced trade with China, which would mean more jobs and more factories here in the United States.
But in the short-term we won’t see any of that.
Instead, all we are going to see is tremendous pain.
First of all, you should expect to see higher prices on any products that are made in China. This is going to hit consumers that shop at Wal-Mart and the dollar stores particularly hard.
Secondly, any companies that sell products in China are going to be hurting. It is inevitable that some will start laying off workers, and that means that there will be job losses here in the United States.
And even the expectation of lower profits will send stock prices tumbling. In fact, we already started to see this happen on Monday…
Major American companies that generate a significant chunk of their sales from China, such as Boeing (BA), Caterpillar (CAT), Intel (INTC) and 3M (MMM), were among the losers on the Dow on Monday.
The Dow has fallen nearly 1.5% in the past week and is close to erasing its gains for the year. If a global trade war breaks out and slows economies around the world, it could bring an end to the bull market that has raged for more than nine years.
In the short-term, nothing good is going to come out of this trade war.
And even in the mid-term, the pain is going to far, far outweigh any benefits.
This is why a trade war should always be a last resort. As much as possible should be accomplished through negotiations, and it is unclear if negotiations were utilized as extensively as they could have in this case.
If China wants to play hardball, they could start dumping U.S. Treasuries or cut off our access to rare earth elements. If they pulled either trigger, our level of pain would instantly be multiplied.
We can definitely hurt China too, but we do not have any magic bullets that will force them to yield.
Once a trade war begins, it can potentially last for many years, and let us not forget that history has shown us that trade wars can often lead to shooting wars.
I believe that a tragic strategic mistake has been made, and this is not going to end well.
***
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].
People should concentrate their thinking on what it would do to China more than on what it would do to the US.
Also, no one even seems to be willing to consider how it might benefit the US, with a return to making our own goods instead of importing Chinese ones, for some reason.
Anonymous and Mensa, you guys ROCK ! Glad to see critical thinking on this site. China needs us because they have a billion + population to keep working. We dont buy Chinese goods,the Chinese people don’t work,they don’t work,they become restless. And your absolutely correct,WE need to start producing.
NOW watch manufacturing jobs in the USA Sour to new heights. After decades of China dumping cheap junk on our shores for Walmart and Amazon, that will come to an end. Time to ship some US Goods over to ChinaMart in all those unused shipping containers. Trump is right, the US has been abused and robbed for decades. Like $700+ Billion a year in Trade Deficits. Our wealth was pouring out of the US to overseas. Buy Local Shop Local and Support USA Made Products.
China dumped but the sheeple made it possible. But, rest, I agree. Prez Trump is brilliant and has compassion but sometimes complex to understand his motives. Loved hi s speech today!
You are correct.
I can not think of ONE product that we need to import. No one.
We don’t need ANYTHING from the rest of the world. They need us.
We need to start acting like the Romans that we are. F the rest of these dirt back shithole nations. As long as we don’t slam our foot down on their dirty ignorant faces, these idiots will misbehave.
It is America’s burden to control these fools.
WE DON’T NEED THEM.
Centurion, I don’t buy the junk period so it doesn’t even faze me.
I quit buying Chinese products years ago and I’m doing just fine. Chinese merchandise is poor quality goods. I’d rather pay more for quality than something that is not going to last. Yes the world needs America, we don’t need them. Who do they call on to be the first line of defense when trouble happens? Who has excelled in every possible field of science and manufacturing and has contributed to every other country’s advancement? If the Chinese are so smart, then why are they stealing from the USA? We have give in to the Chinese long enough; time to take a stand, no matter what.
So we won’t be able to buy cheap sh!t for a little while. Would that be so bad for us to get away form material junk for a while?
This country went to war because of tariffs, and we won. I’m sure I read that somewhere. This “trade war” is not gonna cripple our economy, in the long run we will be stronger.
“Trade wars are easy to win.”
Well it sure as hell will put Walmart, Home depot and the other big box stores that have 80% of their inventory made in China out of business. Maybe this is the only way, a painful way, to get our manufacturing back on its feet.
Cures are often painful.
Yes they are. And the best thing all of us can do is stop buying Chinese products of any kind.
The problem with that is most all products, no matter where they are made, contains Chinese parts. You buy Chinese every time you make a purchase, so the trade war will drive up prices on everything.
Hence the pain of the cure.
“Stop buying Chinese products of any kind”
Well then let’s be sure not to buy anything the Trumps sell, like Ivanka’s line of clothing, shoes and purses all made in China, and don’t buy anything Donald Trump himself sells, such as his MAGA merchandise. All made in China. Hypocrites.
Anyone who can’t see the hypocrisy here is a hypocrite and just doesn’t know it.
The problem is you can’t get anything made here in the U.S anymore unless you start the manufacturing process yourself. The material (cloth) for our military is made in China and imported here to be sewn into uniforms. You can buy American made jeans for 80 bucks a pair but I’d put money on it that the denim is made off shore. We no longer have the basic processes in place to produce anything in this country, it’s not Hypocrisy it’s necessity!
So true about the cloth. As an avid seamstress, embroiderer and quilter, I can tell you that much of what’s on the shelves is made in China. Some comes from other areas as well but nearly nothing is made in the US, whereas years back much of it was loomed in North Carolina.
It has always seemed so wrong to create patriotic items with cloth from outside the USA.
There is some being made in the USA. A small sewing shop I patronize does have some on its shelves.
Well then do the best we can to avoid buying the Chinese shit, you fuckhead.
Menzo,if this site still had thumbs up/down, I would wear out the thumbs up
Southside, sometimes I wish we had those thumbs up/down back too. I used to wear them out, especially on the trolls, LOL.
Menzo, as long as we can get the kind of results we want from the cure, the pain is worth it.
Mr. Anonymous is just plain ignorant.
There are other countries that export goods. Look for them, they exist. For instance I buy my dishes from Italy or Brazil. I’ll do without or make it myself before I buy from China.
I honestly beleive wee need it severely. A major correction it may seem spiteful like cutting your nose off to spite your face but in the long run will set things right both here and abroad.
Poor Michael Snyder. All that work in the Idaho House seat race and only finished 5th out of 7 with 10.5% of the vote. Here’s a clue – you’re not a Mormon, Michael. They are.
But he was on Jim Bakker’s TV show a lot. Doesn’t that count for anything? Ha.
China has been enjoying trade surpluses with the United States thanks in part to Walmart shoppers. They have invested these surpluses in developing infrastructure as well as increased military forces. Some of these investments have been bad but most have not. When you invest in infrastructure, you invest in future growth. We’re not even maintaining the infrastructure we currently have. Who owns the future?
The mistake that has been made, is that we have allowed China to get it over on us for decades. Yes, it has brought us cheaper goods. But it has been at the expense of American industry and jobs.
Trump is attempting to level that playing field, and yes…..it is going to be painful. Snyder believes it to be a mistake to engage China in this manner. Well……what does he think SHOULD have been done? Because continuing the policies of the last 40 years has only served to make us weaker, and China stronger.
As has been said, sometimes the cure is painful. But it may very well be necessary.
Take a deep breath and let our President Trump do what he knows best. We need a balanced trade with china… We will prevail for we are a Great Republic One nation under God.
Great to see XI stand up to this dotard and tit for tat him every step of the way. Maybe XI can do more as well to help bankrupt the exceptional ones. Thats what I would do.
“This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage…”
They sacrifice their people to slavery, and their capitol has air pollution, to the point of low visibility.
Aren’t you creating more of a demand, for those production standards, here?
Also, in what respect does this settle the national debt, no matter how odious.
Take a deep breath and let our President do what he knows best. We need a balanced trade with china.
IMHO this is a great idea. Take the pain now. And as far as being short of Rare Earth’s, for the military, a very few of the windmills will provide all they need at almost a ton per wind mill we have plenty.
Blue collar workers were wiped out over the last twenty years or so. Financially. If this gives American workers a chance, then I’m not against the plan. However, we must secure the borders or perish.
While these Asians are known to be hard headed (see two atomic bombs BEFORE the ultimate surrender in WWII) they will capitulate before we feel much pain at all. If it brings the Walmarts and the Dollar Stores back to competing with local merchants and recreates manufacturing jobs to regain our middle class it will be worth what little pain we endure
I’m still waiting on Snyder’s total economic collapse by the end of 2015 to happen. I think he is more re worried about things going well, then he can’t peddle his fear porn anymore.
My apologies to anyone if I use too strong language. What with all this “migrant” seeking asylum,politicians who don’t give a damn about us,corrupt law enforcement, I’m in a VERY bad mood. In fact,I’m in a fightin’ mood,and don’t give a good damn who I’m gonna be fightin’. It’s the accumalated frustration of knowing we’re being screwed,and no outlet to vent it.
My apologies to anyone if I use too strong language. What with all this “migrant” seeking asylum,politicians who don’t give a damn about us,corrupt law enforcement, I’m in a VERY bad mood. In fact,I’m in a fightin’ mood,and don’t give a good damn who I’m gonna be fightin’. It’s the accumalated frustration of knowing we’re being screwed,and no outlet to vent it.
This is bad language? Do you need an example?
B, I try to watch MY language. I dont care about anyone else’s
The trade war was started by China many years ago.
I’m saving up to buy those American-made jeans.
Only $250 a pair. And the factory might employ 15 people.
R-R-R-I-I-I-I-G-G-G-H-H-H-T-T-T.
Products made in the USA are of such superior quality that they are more cost efficient than poor quality products made in many third world Countries, as well as China.
Bring back manufacturing and life here will return to normal, if and only if, we stop allowing ourselves to be invaded by foreigners. It is insane being the world’s biggest door mat.
If you don’t want to be walked on, get up off the floor.
_
You are so right. Even the people who work in the American blue jean factory won’t be able to afford the jeans.
A tariff is a tax, and you can’t tax your way to prosperity.
We’ve been in a trade war for decades. We’re just no longer being the passive participant we’ve been under the long train of globalist administrations. The fear mongers are always going to worry about the price of anything that interferes with an easy life. That’s just life.
Meanwhile, let’s not forget China’s situation. They’ve had tiny apartments crammed with 8 to a dozen young male college graduates with no jobs. They have had a shortage of women for these young men to marry thanks to social policies. A significant portion of their economy depends on the US markets. Their population is exploding, while Russia’s is decreasing in the Russian far East. Russia can’t even convince its own people to move there by offering them a couple acres for free, and farmers can’t survive without hiring Chinese help. The Chinese are heavily vested in agriculture and timber in Russia and in their North and Northwest regions, the Chinese are needing space for their growing population.
Russia sees the threat. The Chinese have built rail lines to the border where there are no rails to link to on the Russian side. Chinese companies are entering Russia and funding infrastructure. They’re not going to be able to pursue long term strategic aims locked in a trade war with the USA for long periods.
Will prices rise in the US for consumers. Sure. That’s the markets at work. We will recover some manufacturing of a necessity. Will farmers and ranchers be able to sell their goods? Sure. Will prices be impacted, sure. So China boycotts US soybeans and buys from Brazil…who benefits? Brazil’s soybean production is in the tank, so Brazil will be buying from US farmers to sell to China and for use in their own domestic market.
Russia and China are more likely to find themselves in conflict over space, timber, and ethnic/cultural survival than in any conflict with the USA, generally speaking. Because of that, neither can bear prolonged sanctions or trade wars.
Meanwhile, with the EU sinking into a mire of crime, violence, Islamic conquest and growing debt, there are benefits to a trade war. Just in the past 24 hours, the prices of villas across Europe dropped significantly for American expats and investors. Hasn’t been this good of an opportunity to buy European or Canadian property in a long while. Yeah, some throwaway goods and food will be more expensive–but other possibilities open up. A trade war is bad if you’re intent on clinging to the status quo as it barrels over a cliff, but the smart thing is to let it go and embrace the new paradigm/reality. It’s not like China is the only producer of goods in the world.
Your analysis seems right to me. As for throw-away goods, we need less of those anyway because our dumps and landfills are overflowing. If we as a society become less enamored with disposable goods, it’s possible we will eventually find we have more money in our pocket.
If China won’t receive agricultural goods, perhaps this will force Monsanto (and others) to halt their GMO crop production since many areas of the world refuse to import certain US grains/seeds due to concerns over them.
Rare earth elements, despite their name, are actually not rare and are found around the world. China merely found a niche to exploit and the world went along with it.
Gots to start somewhere. Been getting our rears kicked for decades. When the going gets tough, the tough get going. Are we Americans or not?
Sounds like business opportunity in the making for America.
Why does it say “America’s trade war with China”. They started it decades ago. We have the right to defend our country.
It seems to me that China is the shop keeper and the US is its best customer.
The customer can take hid busines elsewhere, and the shopkeeper has lost his BEST customer. There are many more shopkeepers about only too willing to build factories and produce cheaper prices. Just ask japan!
A worker with a starving family will work for $5 a day if he can feed his family for %3.
I recently bought a socket designed to drive grounding rods into the earth. It was made in Germany and sold under the Milwaukee brand. The quality of the socket was evident in the hardness of the steel. Compared to the junk that most Americans settle for, it was awesome. It definitely cost more but with so many wrenches and sockets that don’t last, it was worth the extra money. The typical American consumer is badly educated about what is possible and settle for low quality.
Well these actions sure seem to align with the visions ive been seeing lately: China invading US. Muslims too. Add Ruskies,UN, and economic collapse, natural disasters, planet x system, n nukes n you got one helluva end of age show. C u on the other side. For all whomever call the om the name of the Lord Jesus shall be saved; Romans.
Decades of idiot politicians giving the store (USA FAIR TRADE) away and main stream media fools can do nothing but complain. Correcting the treason of the past will be painful but necessary. Slam the real culprits – the a**holes in congress & past Presidents that ceded our wealth to other nations.
(US) Americans….they huff and they puff, but have no clue. Those perceived jobs will never come back…oh some will…as robots, made in China. JUSA will be the big loser, speeding up its demise with the world breathing a sigh of relief.
Any excess dollars those “enemy” countries made, went usually into JUSA treasuries keeping the dollar ponzi scheme alive. Good luck with that in the future….LOLOL.
1. Whatever you tax is discouraged.
2. We make the mistake of taxing work instead of taxing consumption, so the Chinese made goods have no tax built into their prices, and that, as well as the low labor and overhead costs in China make their cost structure dramatically lower.
3. If we would shift our tax structure from work to consumption it would discourage wasteful consumption and encourage Americans to work harder. At the same time it would lower the cost of American made goods by the amount of consumption tax paid (none now) on the imported goods, at the same time at least leveling the playing field a fraction.
4. I agree we have been utterly stupid to allow our politicians to sell out our jobs the past 50 years, and need to get to trade that is TRADE, ie balanced (last I heard we buy $10 of Chinese goods for every $1 we sell to them), and I think that every year we don’t stop it, the inevitable collapse of a make almost nothing, and import to consume economy looms larger as a result. I don’t like the tariffs, but a continuation of the sellout is even larger folly.
5. Trump’s history had been to bankrupt every company he ran and walk away richer himself. Will he do it again to the shareholders of the USA? That’s my bet.
1. Whatever you tax is discouraged.
2. We make the mistake of taxing work instead of taxing consumption, so the Chinese made goods have no tax built into their prices, and that, as well as the low labor and overhead costs in China make their cost structure dramatically lower.
3. If we would shift our tax structure from work to consumption it would discourage wasteful consumption and encourage Americans to work harder. At the same time it would lower the cost of American made goods by the amount of consumption tax paid (none now) on the imported goods, at the same time at least leveling the playing field a fraction.
4. I agree we have been utterly stupid to allow our politicians to sell out our jobs the past 50 years, and need to get to trade that is TRADE, ie balanced (last I heard we buy $10 of Chinese goods for every $1 we sell to them), and I think that every year we don’t stop it, the inevitable collapse of a make almost nothing, and import to consume economy looms larger as a result. I don’t like the tariffs, but a continuation of the sellout is even larger folly.
5. Trump’s history had been to bankrupt every company he ran and walk away richer himself. Will he do it again to the shareholders of the USA? That’s my bet.