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| China-Japan-Koreas |
| Chinese running out of American products to tariff, counter-productive 25% tax on American oil considered: Zeihan |
| 2018-07-20 |
| China stuff included, oil industry stuff snipped, read the link for the whole piece. [Zeihan] The economic conflict between the United States and China continues to ramp up. Earlier this week the Trump administration announced plans for tariffs on another $200 billion in Chinese exports to the United States. Barring (substantial) Chinese concessions the new tariffs will likely come into effect around the end of August. This is now the third volley in what has become a tit-for-tat trade war. I’m starting to think up snazzy names. "Pacific Pong" doesn’t have quite the right je ne sais quoi, but I’m working on it. Suggestions welcome. The Americans’ imports from China are triple China’s imports from the United States (quadruple if you factor out services). The simple fact is the Chinese are already running out of American imports to penalize. Any effort to shift the dispute to something beyond goods trade will similarly end in colossal failure. The Americans control global trade routes, global energy, global security, and global finance ‐ everything that makes the Chinese system possible. The Chinese simply can’t bring the fight to other fields without suffering immeasurably. (Which isn’t the same thing as me saying I’d like to be an American company operating in China right now.) Chinese holdings of American government debt don’t even give Beijing leverage as such "investments" in reality are capital flight from the Chinese system. Endless inspectors already vex American companies in China, issuing fines and demanding compliance with laws local competitors are given a pass on. They don't like our companies in their country. While Chinese state media continues to put on a brave face, the days of tone-deaf chest-beating are gone. Government censorship guidelines now regularly bar terms like "Trump tantrum" and "trade war" and in general discourage the discussing of any angle of the issue whatsoever. One of the problems with stoking nationalism is that it can be hard to turn off. With the Politburo realizing they have little ammo for this sort of fight, political consolidation at home is far more important than scoring points in a media firestorm. But that’s not what I want to talk about today. I want to talk about one of the funniest things I’ve seen in months. On July 11 the Chinese floated the possibility of a 25% tariff on U.S. oil exports. Several media commentators immediately pounced on the trial balloon as evidence of something that would get Trump’s attention because of his stated interest in "achieving American energy dominance." Maybe it will. The criteria for what attracts or doesn’t attract the American president’s attention continues to elude me. But that doesn’t mean a tariff on American oil isn’t a fabulously stupid idea. It has to do with the nature of the oil market, and in particular the role of American crude within it. While the pot-stirrer in me would love to see what would happen to a trade-dependent internationally-wired oil-importing economy like China’s under full financial embargo, I’m fairly sure the Chinese will blink on this one. Financial sanctions of the type the White House is preparing would hit China at least an order of magnitude harder than the tariffs they are staring down, and the Chinese are not suicidal. And while I firmly stand by my claim that no one can really claim to know what Trump is thinking I have to admit things are starting to look more than coincidental: a last-minute cave by the Chinese on Iran just as the third round of tit-for-tat tariffs really start to bite? I see some serious negotiating leverage there, useful in many theaters. The concentration of power in the global system continues to gather in the Americans’ favor. Trump is demonstrating he doesn’t need to build an alliance to fight and win a trade war with multiple countries simultaneously. Trump is showing he can wield financial tools simultaneously with trade tools to crushing effect. Trump is showing an enthusiasm for standing up to the business community, something that resonates not just with his base, but also Bernie Sanders’. And in case you missed it, last week the United States became the world’s largest oil producer courtesy of shale, granting Trump even more leverage and autonomy in international relations. America first. |
| Posted by: Herb McCoy |
| #5 I look forward to our new best trade and production partners in India, Viet Nam, Taiwan, Indonesia,.... |
| Posted by: Frank G 2018-07-20 19:47 |
| #4 The trade imbalance is more than just money. America can live a lot longer without cheap a$$ plastic stuff than China can live without oil and food. |
| Posted by: Airandee 2018-07-20 17:13 |
| #3 Oil being fungible... India, South Korea, Japan, or even *snicker* Taiwan will happily buy. |
| Posted by: magpie 2018-07-20 11:20 |
| #2 China imposing 25% tariff on oil coming from the U.S.? Isn't that like shooting yourself in both feet? |
| Posted by: JohnQC 2018-07-20 10:34 |
| #1 China tariffs the imported oil, sells it higher to Nkor. Nkor asks world for more financial aid. IMF and other global banks are ready to work with North Korea, if it works with them I think I see Trump's plan for everyone to save face. |
| Posted by: Skidmark 2018-07-20 08:43 |