China is well positioned to weather Trump’s trade war

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The writer is a founding partner and research manager in the drononomics

One week of tariff injuries left the world economy, which was not much worse than President Donald Trump “Liberation Day”. Trump has risen from threats of his more extreme reciprocal tariffs, but we still have a 10% minimum charge for almost all US imports, steel, aluminum and cars of cars.

The President’s team roar to rationalize chaos as a major program to win a coalition to win Chinese Merkanism. But any such program is doomed to failure. To understand why we must first get what trump really wants. Ordinary requirements. The fact that he wants to break the unfair trade practice, eliminate trade deficients, reindustrialise america, withstand China. Trump is often referring to these goals. But these announced goals often contradict each other, contradict other policies or are obviously unavailable.

A better explanation is that the trump card motivates maintaining mainly and the desire of the exercise force, and the tariffs are the best tool for that force. The purpose of its general trading war is to eliminate restrictions on the global economic order, the unilateral implementation of the US government and the implementation of the government by the President.

Tariffs are a preferred tool for two reasons. First, Trump has been believed for decades that the rest of the world will pay any price to enter the US market. Second, and maybe more importantly, as long as the Congress does not choose to stop him, Trump has unlimited personal reputation on any country to impose tariffs on any country.

Whatever wins first, first of all, the presentation of domination and extraction should be presented. Countries that do not actively resist its tariffs have been merciful than higher pace. The country that dared to be considered him was punished.

Many countries now understand that different economic rationalities offered by Trump’s advisers will simply dress the windows. As long as the Trump is responsible, the United States is unreliable, and no healthy leader will join him in the Crusades against China.

The second reason why Trump’s trading war will not fail. Last Wednesday, the “Mutual” uglier retreat showed that the bond market sets its tariff size, and it is much smaller than it thought. Trump had to step back from high tariffs after an unfavorable market reaction.

Thus, Trump has lost his levers in commercial negotiations. He cannot re-raise tariffs, as the treasury market will be restored again. For most global leaders, promotion will reduce rapid transactions where tariffs are falling into cosmetic concessions and signs of the version. They do not include promises that will blow up their trading relationship with China.

The third reason why China’s trade war will fail is China. At first glance, China is now worse than the United States. It has lost one of its largest export markets and seems to be diplomatic isolated. But, in fact, it is good to be ready to fight the war on economic capture against the United States.

China can lose demand from the United States, but it can be replaced by home consumer demand, which has been abnormally weak in the production of severe monetary policy and state resources. Xi Jinping has turned the course and is now serious about promoting domestic demand.

China can also be good without importing from the United States. The five-year export controls have helped it be very good without making American technology.

Despite some market fears, China can stabilize without the impairment of the main currency. Beijing slightly calmed down its control over Renmin, to absorb some of some pressure pressure and could allow it to fall into another percentage or two. But the persuasive step is a demand stimulus to bring capital flows, supporting the exchange rate.

Meanwhile, the United States is facing much higher inflation due to its tax on Chinese consumer goods. It’s relying on Chinese industrialists three times in China’s rely on US components. Higher investment prices are already damaging to business investment. China requires a request for a requirement that can solve a better macro policy. The United States is facing a supply shock and possible voltage, which can only be resolved by changing economic regime.

If the purpose of Trump’s new trading war with China is to acquire Beijing before our power to kneel, the result is only disappointment and frustration.