Trump’s Trickle-Down Trade War
Donald Trump has officially declared that trade wars are good.
Well, he’s got a BIG one with China.
I’ve tried to rationalize the insanity and I think the short-cut for the radical conservatives is for them to believe that all of this madness will translate to the jobs and more income that Trump promised in 2016.
This, of course, is folly.
Trump’s approach to China is like using a wrecking ball to cut a turkey. It’s messy and there will be no benefit to those who need it most.
Let’s walk through the likely results of Trump’s actions:
- Massive tariffs on Chinese imports
- Incredible inflation with prices on low-cost goods in places like Wal-Mart, Home Depot and other mass distributors of poorly made products
- Huge increases in the cost of living for Trump’s base: white, middle America
- China retaliates by dumping US treasury holdings (currently estimated to be $1.17 TRILLION)
- The US dollar collapses AND/OR interest rates have to escalate (which they would anyways with the increase in domestic prices)
- We now have the makings of a post-WWI German inflationary crisis: protectionist government, devalued currency, massive debts not worth anything and escalating interest rates
- Foreign investors stop buying US assets – for a while
- The price of all ranges of asset classes collapse in the US
And then what happens? Chinese companies swoop in (maybe under different venture company names or numbered companies) and scoop up what’s left to buy in the US.
With one simple action – the declaration of a trade war with China – Trump has sold out America to the so-called enemy that he’s trying to put at bay.
What an idiot.
Or is he …?
NOW … here’s the thing I’m having trouble getting my head around: what if he’s right?
Hear me out: for decades, most of the Western world has sold out everything to China. Work. Ownership. Debt. Food supply. Pretty much everything else.
And the question is why? China has a deplorable record with the environment, human rights, economic distribution, access to their economy and more.
So, I hate to admit that despite everything I said above, maybe in a very weird, perverse way, Trump is right to take a stand against China.
We are reaping what we have sewn. The Western world might as well start the (Chinese) proverbial process of a walk of a thousand miles beginning with one step.
Of course, this can only be true if Trump has the moral high ground.
He doesn’t, so I’m back where I started.
I’m so confused …