Of course, Donald Trump has threatened a much broader trade war against China, claiming he will impose 100 percent tariffs on Chinese goods, but as he has previously suggested, this is less a negotiation than a negotiation. This appears to be close to the opening round of negotiations. Firm commitment.
Certainly not just his senior advisers and those close to him, but also those who are more obviously connected to and aligned with big business. He has emphasized that he intends to act as the first move. He was re-appointed in January.
capitalism
The Chinese side has, of course, treated President Trump’s announcement with a degree of public concern, correctly highlighting the expected costs to U.S. consumers, but for example, the ambassador to Washington He was keen to emphasize that he was fully aware of his intentions. To negotiate the final tariff position.
The broader strategy here, outlined in a summer speech by Scott Bessant, President Trump’s pick for Treasury Secretary, is that if the international economic order is being reshaped, and it is, If so, then the United States should use all the levers it has to bend. This reshaping becomes an advantage in itself.
One obvious strategy is to take advantage of the enormous size of the U.S. economy, with some 350 million consumers and their dollar purchasing power. How does this work?
for example, President Trump has promised to impose a 10% tariff on all Chinese products if China does not take control of fentanyl supplies to the United States. – Incidentally, China says it is not involved in this, but you can see here how the threat of tariffs can trump other policy goals.
Much of what the Trump administration does is likely to be fundamentally reactive, becoming increasingly hostile to what the administration sees as the interests of U.S. capitalism under the guise of “America First.” It will correspond to the world as the Trump administration perceives it.
intensively planned
The most important of these is military power, and along with it technological superiority in important areas. China is moving with alarming speed to threaten U.S. primacy, at least here, so it will begin with the first Trump administration, extend under President Biden, and deepen further in President Trump’s second term. Very likely, we are seeing increasingly aggressive trade movements. The aim is to prevent China from gaining that advantage.
Stepping back, the overall impact contains significant historical irony. China has a much more tightly organized form of capitalism around a central economic plan that includes a deliberate and long-term focus on supporting high-tech industries.
Depending on the results of this plan, the US state has introduced its own plans and forms of intervention, first in counter-tariffs and then in investment and industrial strategies.
The process of competition between capitalist states reproduces planning within capitalism. In other words, through the process of capitalist competition, plans generate plans.
Bessin himself believes the Biden administration has introduced too much “central planning” into the system, but as long as the U.S. government remains responsive to China, the ratchet effect will continue to operate: Central planning will increasingly dictate central planning responses from the United States.
competitiveness
This is one of the main drivers currently moving the world away from neoliberalism and towards more state-led forms of capitalism, usually accompanied by more entrenched authoritarianism.
These tariffs may not work as intended. Evidence so far suggests that China has responded by putting more resources into its domestic industry, allowing Huawei, a high-tech supplier facing heavy tariffs, to make phones with homegrown chips. This suggests that it has become. It’s far from the cutting edge that Taiwan’s TSMC is working on.
Regulations and tariffs are creating something of a hothouse for Chinese innovation, which is, in other words, not exactly what it was intended to be. The American state is actually harming its own interests by being more demanding on its supposed interests, but this actually tends to strengthen Washington’s case for further tariff restrictions. Dew.
Obviously, this isn’t particularly reasonable. In theory, there is a path through this – if the US is concerned that Chinese trade will undermine its manufacturing concerns, it could (for example) use the threat of tariffs to , it could also win a more favorable general position vis-à-vis China – by agreeing to a control agreement. Vice President-elect J.D. Vance has argued that devaluing the dollar will make U.S. exports more competitive around the world.
Back in 1985, this was an agreement the United States struck with Japan, the so-called “Plaza Accord,” in which Japan, in response to threats of increased tariffs on Japanese exports, agreed to revalue the yen and reduced its own exports. I decided to do this. Competitiveness will decline, but pressure on the United States will be eased.
rebalance
This would allow the United States to regain control, rebalance the global economy, and break the wheels of central planning, Scott Bessan said. Who proposed the second Plaza Accord?,thank you.
Sahin Varee, writing in the Financial Times, argues that the United States under Trump could be trying to reach the same deal in a parallel situation with China. Vallee believes that the macroeconomic entanglement between China and the United States will lead to a reassertion of a certain kind of economic rationality.
Both sides will recognize that it is in their mutual interest to exit the conflict – as in 1985, when the US uses its capabilities to wisely blackmail and strike a “big deal” with China. If they are prepared, the dollar will be allowed to fall in value. China allowed the yen to appreciate and tariff restrictions were reduced.
I think this is too optimistic. One problem is that Mr. Valley wants to cut U.S. spending. This is necessary for a global rebalancing effort to prevent the United States from demanding increasingly effective borrowing from the rest of the world.
saber rattle
The first Trump administration was very careful not to touch most Americans’ welfare benefits, and Trump himself was associated with considerable generosity (for America) in dealing with the coronavirus. .
For all the chatter now about cuts to the “administrative state” and whatever Elon Musk’s feats may be, actual politically unpopular spending cuts will be terribly difficult to get past this president and this Congress.
However, the main difference between the 1985 agreement and today is that Japan was politically and militarily subordinate to the United States, whereas China is not.
So while Japan will ultimately relent relatively easily and accept a deal that turns out to be particularly bad for its economy, China has no reason to do so.
Therefore, even if some ancillary deals were cobbled together for some consumer goods, civilian components such as military supplies and advanced semiconductors would be subject to a different logic. Economic saber rattle of real war.
this author
Dr. James Meadway is an economist and former political advisor. This article is based on a transcript of a Meadway podcast episode. macrodose.
