Trump’s China Policy: Backfiring?

The effectiveness of any future Trump administration hinges significantly on its economic strategy, particularly concerning China. A key concern is whether a second term would see a continuation of “neoconartist” appointments, suggesting a failure to learn from past policy outcomes. The core argument is that Trump’s prior economic actions, particularly tariffs, have inadvertently benefited China while harming the U.S. economy.

China’s Domestic Focus and Global Expansion

As articulated by Xi Jinping, China’s current economic agenda prioritizes achieving “moderate prosperity” throughout the country, moving beyond the initial goal of poverty eradication. This involves redirecting China’s vast manufacturing capacity from exports to its massive domestic market of 1.4 billion people. China is actively raising wages to enable its citizens to afford these goods, especially for its poorest citizens, mirroring Henry Ford’s strategy to create a consumer base for his products. This internal economic reorientation is well underway.

Historically, trade with the U.S. was crucial for China’s technological and industrial development. However, that phase is mainly complete. With the ongoing global de-dollarization trend, the U.S. dollar is becoming less essential for international trade in commodities like oil, minerals, and grain. Consequently, China’s substantial foreign reserves of U.S. dollars could become increasingly useless if the U.S. exports nothing that China cannot acquire more cheaply elsewhere.

How Tariffs Help China

Paradoxically, Trump’s heavy tariffs on Chinese products could inadvertently serve China’s interests. By effectively blocking Chinese exports to the U.S., these tariffs provide China with a justification to block what it views as overpriced, inferior-quality U.S. exports in return. This allows China to:

• Focus on its increasingly prosperous domestic market.
• Strengthen connectivity through the Belt and Road Initiative (BRI).
• Deepen economic ties with rising BRICS economies, especially ASEAN.
• Pursue massive development projects in the Russian Far East.
• Anticipate increased demand for Chinese goods from a wealthier India (in the short term).
• Cultivate massive trade partnerships and resource suppliers in Africa and Latin America.

Europe’s economic relevance has declined drastically, except for Turkey and BRI-connected nations like Hungary, Serbia, and possibly Slovakia. It’s becoming more prevalent that European economies are collapsing and are irrelevant in this new global financial landscape.

The U.S. Dilemma: Economic Fallout from Tariffs

Trump’s proposed blanket tariffs on Chinese imports significantly challenge the U.S. economy. Such tariffs risk crippling major U.S. retailers like Apple, Walmart, and Costco, which heavily rely on Chinese manufacturing. This, in turn, could lead to massive job losses in the U.S. service sector and potentially spark hyperinflation, risking civil unrest or even revolution. Furthermore, while Trump demands that companies like Apple bring manufacturing plants back to the US, the prices of Apple phones would skyrocket. Another consideration for Apple is fully equipping their manufacturing plants with robotic arms to assemble their iPhones.

Tariff Evasion and Manufacturing Realities

A critical point raised is that Chinese-owned factories in countries like Vietnam, Mexico, and Indonesia can rebadge their products as being made in those countries, thereby evading U.S. tariffs. This parallels how Russian oil was rebadged by India and sold to Europe, circumventing Western sanctions. Even if these factories are not Chinese-owned, they can import over 90% of their components from China, assemble them, and then export the finished products as being “made in” a third country, still bypassing U.S. tariffs.

High-End Industries and U.S. Decline

Regarding targeted tariffs to protect high-end industries like microchips or aerospace, the U.S. has already attempted to ban Chinese microchips and relocate TSMC to Arizona. However, this effort reportedly failed due to a lack of qualified U.S. personnel. The claim is that China is already producing 3nm microchips, rendering U.S. efforts to deny them access (e.g., by hypothetically bombing TSMC in Taiwan) moot.

Furthermore, premier U.S. aerospace firms like Boeing are “failing,” citing issues with spacecraft and planes. This is attributed to a lack of investment in research and development (R&D), with profits allegedly being diverted to share buybacks and CEO bonuses.

Conclusion: A Dire Outlook for the U.S.

Everything Trump wants to do economically will massively help China and harm the USA. It parallels the Biden administration’s sanctions against Russia, arguing that these actions inadvertently bolstered Russia, harmed Europe, and accelerated de-dollarization, ultimately undermining the U.S. economy.

The overarching sentiment is that the U.S. is “fucked,” and attempts by U.S. leaders to halt global economic shifts, such as de-dollarization, are futile and counterproductive, akin to King Canute trying to command the tide.