4/08/2018

Donald Trump's Trade War is 10 Years Too Late -Part 1

In 2009, the year after the 2008 GFC (Global Financial Crisis), world trade shrank for the first time in half a century. China then was far more dependent on the American market in terms of percentage share of exports to GDP.

Over the past 10 years, China's GDP more than doubled, averaging more than 7% per annum, though economic growth ranges between 6.5% to 6.9% in the last 3 years but overall the average annual growth rate was well over 7% in the past decade for the Chinese economy to more than double between 2007 to 2018.

After the onset of the 2008 GFC, the drastic fall of demand for Chinese exports in the American and European markets, massive efforts and policy initiatives were taken by the Hu/ Wen led Chinese government to diversify and restructure the economy away from the export-led economic growth especially to the debt-laden American economy which is predicted to implode cyclically given its massive imbalance in its GDP consumption spending composition, savings rate, budget deficit etc. After 10 years of silent but relentless slogging, the Chinese economy is far more diversified, urbanisation has continued to intensify, services has become much larger as a share of GDP, social security has improved and more and more Chinese consumers are confident and willing to spend on consumption. All these implied that any protectionist measure especially tariffs would harm the American consumers and economy much much more than the Chinese.

With the US economy heavily in debt and the average consumers highly leveraged, the days of the American economy as the number one consumers are likely numbered and its importance diminishing each passing day. Any further escalation of the current budding trade war posts far more systemic threat to the American than the Chinese.

All the major political events in China such as last year Oct Party's Congress and this year March NPC are over. President Xi Jinping has consolidated his power and the people and society are ready to stand united behind the government in any economic showdown forced upon them by the imperial American white supremacists. On the other hand, the domestic political battles in the US are just beginning and subjected to change especially from missteps in managing the economy and international relations which bring more setbacks than benefits to the American economy.

Donald Trump is facing a more and more uphill battle in the upcoming mid-term election to maintain the Republican razor thin majority in the US Senate and given more and more House of Representatives seats held by the Republic are becoming hot battle grounds, even the majority in the lower Congress is under threat. By losing their majority in the coming mid-term, Donald Trump would probably become the most "besieged" US President in history and his remaining term may just become pure lame duck and all about dodging impeachment as much as possible. Also he will likely face a strong challenge for the 2020 Presidential bid within his party if he survives a full term till 2020.

Given such outlook, likely Donald Trump would become more and more desperate in maintaining the majority in the Congress. Desperation probably would lead to taking more and unnecessary high risks. As most of his best advisors are gone and now surrounded by like-minded hawks, the perils of groupthink under such circumstances are much more heigthened and the enactment of "Bay of Pigs 2" groupthink fiasco may become more and more of a reality.

Above article posted by Leo81

10 comments:

Anonymous said...

We can forget about who runs the Government in US, whether Democrats or Republicans. They are all the same, controlled by the same evil force. And with that we have to live with perpetual conflicts and wars.

All US Presidents appear to old much power, but they still have to conform and obey the evil force or be assassinated like Lincoln and Kennedy. If they can kill their own President, it shows how much power they hold behind the scene.

Time for mankind to reboot. And it looks like a nuclear war could be the end point. How far away will this happen, we may not be around to see.

Anonymous said...

The only way to have world peace, freedom and fair trade is to destroy completely the Evil Empire, and its allies, that continues to perpetuate wars, massacres, murders, plunder, looting, rapings, and all sorts of crimes against humanity but never can be brought to task in an international court of law.

This can only be done with a Nuclear War - the Last World War.

Leo81 said...

Part 2: The Real US Problem: Multilateral Trade Deficits

Basically Donald Trump looks like an economics noop or perhaps simply trying to bluff his way through.

He acts as if there is no single able economist in the US to provide him any advice on how to solve the US trade deficit problem, beginning with going after China with all kinds of dubious excuses in an attempt to reduce bilateral trade deficit.

Any trained economist would surely see through the holes in such a stance. The Americans real problem is their multilateral trade deficits with the world and not the bilateral trade deficit with China. Even if China accepts Donald Trump's unreasonable demand and unilaterally import another US$100 billion of their oil or aircrafts, such measure hardly solves or improves US economy overall or in the long term. In fact it may even cause more harm in the long run by making such US industries even more inefficient and addicted to such measures to enable exports to foreign markets.

And for the 1,300 products worth US$60 billion slapped with 25% tariffs, how is it going to solve the US trade deficit problems when importers can turn to other sources to import such goods?

Under free trade agreement signed with trading partners, such protectionist measure is known as trade diversion and to so called divert trade revenues from other countries to trade partners within the FTA grouping. But in this case, probably the US could end up importing many of the 1,300 Chinese tariffs targeted products from many other non-FTA countries and create jobs in those countries instead of the US, meanwhile making cost of living worst off and higher for the average US consumers through paying more for similar products from elsewhere.

Faced with an unhinged bully, China's counter moves so far have been measured but firm, otherwise it would probably invite further unabated aggression from the antogoniser who smells blood in any weak response or weakness and further rain countless blows and inflict untold injuries on the hapless victim.

Many international experts find Donald Trump's trade arguments confused and befuddling and would ultumately worsen than solve the Americans domestic economic problems. Doubling down last Thur 5 Apr on intention of hitting another US$100 billion worth of Chinese products with tariffs may be more of a sign of an unravelled binged gambling addict at the casino table who has lost his head and mind and desperately trying to recoup his losses and in the process ends up eventually in an unsalvageable situation for himself. Unfortunately, at this moment, there seems no one able to rein in on the muddled protectionist trade war measures taken by Donald Trump thus far.


PS: Mr Chua, above the 2nd article for your consideration to post in your social media site. Thank you.

Chua Chin Leng aka redbean said...

Ok, will post tomorrow.

Leo81 said...

Thank you Mr Chua.

Anonymous said...

"Under free trade agreement signed with trading partners, such protectionist measure is known as trade diversion and to so called divert trade revenues from other countries to trade partners within the FTA grouping."


Mb one of their hidden cynical agenda is to divert trade to India and hit China hard?

Anonymous said...

The agenda is not to let China be the No 1 economy. All the years of hoping for the Chinese economy to collapse has not materialised fast enough or ever. Hence they want to create a tipping point by resorting to a trade war.

Everyone knows that the US deficit can never be reversed and its debts can never, ever be repaid. And with China making a move to trade oil using the Yuan instead of the US$, the stakes are too high for the evil empire to swallow. They will try to bring China down or cause undue problems with all kinds of desperate moves that only Trump can make. For this purpose, they have put the right guy in the White House, whether crazy, ignorant or dumb.

Cranium said...

Donald Trump is not alone. He has backings from the Illuminati, Freemason and the Ku Klux Klan.

He may appear crazy to some but he is not crazy. He is a MAD (Mutually-Assured Destruction) proponent. And the worst of all MAD proponents, are those who always want to win only but not lose, want to take only but not give. These are the most Dangerous, Twisted and Crooked Minds. They simply do not give a damn to any other people not to any agreement they have made with you before. They only want you to follow their self-made laws but do not abide in any laws. They even dare to defy the Laws of Nature, if they can.

These people are highly evil and satanic. Outwardly, they may project themselves like an angel. Inwardly, they are downright despicable, mean, selfish, unpredictable and extremely sadistic and cruel.

Enough said for now.

Anonymous said...

Pussy-Groping Adulterous Animal Dotard Trump Using Chemical Weapon As False Flag To Help The Besieged US-Created ISIS Forces And Terrorists

Twitter posts by @realDonaldTrump:

Many dead, including women and children, in mindless CHEMICAL attack in Syria. Area of atrocity is in lockdown and encircled by Syrian Army, making it completely inaccessible to outside world. President Putin, Russia and Iran are responsible for backing Animal Assad. Big price...
9:00 PM - Apr 8, 2018

@realDonaldTrump
....to pay. Open area immediately for medical help and verification. Another humanitarian disaster for no reason whatsoever. SICK!
9:04 PM - Apr 8, 2018.
End of Twitter post.



The World must not be hoodwinked by the greatest con man in the US History.

Trade War's Consequences said...

PM Lee, speaking at the opening address of the annual Boao Forum, said:

“And if the disputes escalate and destabilise US-China relations, the consequences for the world could be catastrophic,”