Penguins are panicking and Chinese generals are being “disappeared” as President Donald Trump escalates his trade war against the world.
Most of the reciprocal tariffs are temporarily paused at 10% as countries with feeble economies rush to DC to try to negotiate a better deal. Which is as it should be. China, however, is trying to put on a brave face and pretend that it stands a chance in a trade war with a nation that it has a trade surplus with.
One of the clearest signs that China is losing the trade war is the fact that CCP leader Xi Jinping is losing power. General He Weidong vanished a month ago and hasn’t been seen since. He was one of the top two senior leaders in the People’s Liberation Army and a staunch Xi ally.
There are two possibilities behind this guy getting whacked. He was either killed by Xi Jinping, or by Xi’s enemies who sense that he’s losing his grip on power.
The fact that China just raised its tariff to 125% against the US suggests that it’s the latter. Xi knows that he’s in a losing position in a trade war with Donald Trump. But he also knows that he will be the next one to “disappear” if he doesn’t appease the hardliners in the CCP. (Ain’t communism a grand system to live under?)
This was Kevin O’Leary’s point last week when he suggested that President Trump raise the tariffs against China to 400% and get it over with. That would force Xi to come groveling to Trump for a better deal. Unfortunately for Xi, that moment will also mean that he’s probably going to end up in a ditch somewhere.
As for President Trump, he has been firm in stating that all countries that want access to the US consumer market must pay their fair share from now on. No more ripping us off. No more lopsided deals that incentivize companies to ship their manufacturing jobs overseas.
“Ultimately, we pretty much can do what we want to do,” the president told reporters last week on Air Force One. “We can set the tariff, and they can choose not to deal with us, or they can choose to pay it.”
“If they think it’s too high, they don’t have to do business with us,” he added.
The American economy has been impoverished and hollowed out by decades of unfair trade deals. America has nothing to lose and everything to gain by reordering the global trade system. Every politician in Congress knows this, but they are opposing Trump’s tariff plan because they have benefitted financially from the current world order.
China has no leverage in this fight. That is specifically because of their trade surplus with the US. America would be better off by not trading with China at all because it would force our industries to begin manufacturing our own goods and onshore all those jobs we’ve lost. We can make everything from pharmaceuticals to furniture, and we certainly don’t need any of the weird foods that they grow in China.
Everyone is worried about the price of goods right now, especially electronics, but look at what’s already happening in that arena. TSMC (the largest chipmaker in Taiwan) and Intel have made a preliminary agreement to form a joint venture to operate Intel’s factories in the US. United Microelectronics and US-based GlobalFoundries are talking about a similar venture.
That’s just one industry. Millions of jobs that we lost because of the Obamas and the Bushes and the Clintons are going to be pouring back into the US in the coming years when President Trump rebalances the global trading system to our benefit.
Will there be some short-term pain from this? Of course. People’s 401Ks might take a hit. That’s why the price of gold is up to a delicious $3,333 this week. Folks recognize that gold is real money, unlike stocks. But at the tail end of this process, our children and grandchildren will inherit a country that’s worth living in once again. It will be a land of hope and prosperity once again, instead of a country where main street has been hollowed out in nearly every city.
It’s very likely that it will also be a world without Xi Jinping in it. That dude’s in trouble.
