China is now up against a Great Wall. Nearly half of the products they’ve been selling us are now too expensive for importers to buy and resell at prices that are competitive with other nations like Vietnam and Indonesia, who can produce them at less cost, and are not under burdensome tariffs as China now is.
Manufacturing is already leaving China for other nations. Any country that can produce what we need at the same cost or even a little higher, will beat China competitively, if they’re not subject to tariffs, and China’s economy is starting to circle the drain.
President Trump gave China only one option, to stop stealing and cheating and accept the new reality. Since they refuse to do so, he is forcing them to do so anyway. The tariffs he’s now imposed are cutting off the forced technology transfer. If we’re no longer doing business with them, they can manipulate their currency value all they like, as it no longer affects us. Their refusal to balance trade between us no longer matters if there is no trade.
There will be trade, we still need things from China and they still need things from us. Food, mostly, grain, soybeans and other foodstuffs. We grow far more than we use and they have 1.4 billion mouths to feed. They just retaliated with a tariff on $60 billion of our goods, which is very likely to trigger a 25% tariff on the remaining $325 billion of goods we buy yearly from them, and which will be disastrous for the Chinese economy.
So what will they do? They’ve been gearing up for war with us for a long time and becoming increasingly threatening and belligerent. Seeing the imminent collapse of their economy, will they strike?
The Chinese are unlikely to attack us unless they think they have a winning strategy, which they may. It’s more likely that they’ll strike out around them to try to control more territory while they still have the strength, means and ability to do so. Very possibly they’ll try to expand their border with Russia. An attack on Taiwan is definitely looming, there’s increasing noise about that on the Internet almost daily.
They may agree to all our terms in a trade deal after all, and then cheat and try to cover it up. Or they may sign on and then violate the agreement bit by bit over time. What they won’t do is agree and then honor the agreement.
The very fact that the Chinese leadership is so solidly intractable when it comes to making any sort of fair trade deal is a bad sign for their future intentions. My personal opinion is that they’re not going to just accept the tariffs without a fight, a real fight, guns, airplanes, rockets, bombs. The only question for me is, who do they think is weak enough to conquer, that we will not rush to defend?