The left calls tariffs a sales tax on Americans. It’s not. What happens when you put a tariff on China? China eats the tariff because there are several low labor cost competitor countries. If you put an across the board tariff on other countries, they will eat the cost to remain competitive. That is generally how it works for low barrier to entry goods. Most of what China sells.
For high barrier to entry goods like cars, you set the tariff at a point where they choose to build the product in the US. Thus avoiding the tariff. Why does that happen? Because the US is the biggest and most profitable market for most international goods.
What about strategic things like steel? That will cost a little more (but decrease with energy prices). However, material costs are a very small fraction of the cost of consumer goods. Labor and overhead are much bigger factors. And typically, other countries will not move a strategic good to the US.
What about exports if the other countries do something similar. Well they already are. Tariff targeting will get them to lower their tariffs and make it better for our goods. And a lot of things we export are things that they don’t make or make to our level.
That is the short version.
For anyone that is paying attention, it looks like the economy in China is on the verge of crashing. It appears that there has been some type of coup in China that occurred at the last plenary session of the CCP and Xi has been stripped of his power. For the time being Xi is only there as a figurehead to give some semblance of stability while the world is distracted on other things. The main players with the power right now seem to be the head of the military, the premier, and the minister of public security. Along with Xi, several of his hand picked cronies have also been put in check.
To think that Trump may have triggered this snowball rolling with his tariffs is more than coincidence. He obviously was way ahead of everyone else when it came to dealing with China. He knew which cards to play in order to bring the house down. In addition, my understanding is that most of the military is against any move on Taiwan because the military is not ready for prime time despite what the propaganda says. Many in the CCP are fed up with Xi and his grandiose emperor delusions that have all but wrecked China's economy and put them on a trajectory of confrontation with the US. Like elites anywhere, the CCP's worst nightmare is pitchforks and torches - which the Chinese public is not far from at the moment. It will take them years to climb out of the hole - if the CCP lasts that long.
The Chinese have been papering over a financial collapse for years. It is getting harder and harder to do that. Xi and the power families of the CCP have been battling for years now. I think he took out two families. The other families may have ganged up on him though. My inside conduit passed away almost two years ago.
You are correct. As long as the money kept flowing they had no reason to fix any systemic problems that are now biting them in the asteroids. The whole system is built on corruption. The CCP has systematically destroyed Chinese culture and created a society of competitive mutual harm for money - and the elites are always left with the lion's share.
With Xi's purging to consolidate power he made a lot of enemies. Now that he has been stripped of power, the shoe is on the other foot. The wolf warrior has become a kitten trying to extend an olive branch to those he tried to stomp out. General Zhang Youxia, who seems to be in control of the military, has been smiling like a Cheshire cat as of late. My understanding is that on the first day of the July plenary session Xi confronted Zhang Youxia to get him to step down. Instead, Xi had a serious health crisis and the others took advantage of the opportunity to remove Xi. It is rumored Xi had a stroke. The doctor that saved his life has since disappeared. At any rate, things are changing within the power structure at Zhongnanhai.
I have been a China watcher for several years. It is hard to see into that black box of the CCP, but if you know what to look for, it can be seen. What seemed like rumors a few months ago have taken on new importance and signal major power shifts within Zhongnanhai. The question now is how the CCP is going to hold on to power with everything collapsing around them. There are protests breaking out all over the place despite efforts to suppress them. When the people have nothing left to lose they are not afraid. They are at the tipping point.
I am hoping that Taiwan invasion plans can be trash canned. General Zhang Youxia is from the Army. Xi over his term has shifted importance of the PLA from the Army to the Navy and Rocket Force to further invasion plans of Taiwan. The general seems to already be trying to shift the emphasis back to the army - which means stripping power from the Navy and Rocket Force. We will see what kind of power struggles that will cause in the future. It does not appear the brass is in favor of a Taiwan invasion. That may be the primary reason Xi purged most of the military leadership. He did not allow opposing viewpoints and sought to place yes men in positions of power. The CCP right now has to be concerned with simply maintaining their hold on power in the face of a failing economy and very negative public sentiment. It will be interesting.
Solid intel. Thanks! I will watch for your future posts.
Thanks. I don't post much. I leave all the majority of posts to the others. This is one area however I know something about and thought I would chime in. No one else seems to be discussing it - or - they have a very distorted view of geopolitics which I don't feel like arguing over. Thanks for your attention.
Here is some further intel. It is hard to read the tea leaves in that CCP black box. All the latest indications of a power shift within Zhongnanhai may end up being one big head fake to hide what the CCP is really up to. I heard some rumors last week about a different kind of shift taking place - moving key industries west and more inland. It has received some movement on Chinese social media - which always must be taken with a grain of salt but may be indicators of something happening. It is always hard to know. Usually when there are rumors I wait until there is some more evidence before giving these rumors any serious consideration. People have been reporting industrial relocations to more western inland areas like Sichuan and Chongqing. Some people were reporting that locals there were getting rich due to relocation compensations - but I don't believe that for one minute. Yes, there could be relocation demolitions taking place, but the local population beyond government officials certainly will not be getting rich from the transfers.
I ran across this video today that deals with some of those rumors I was hearing - it is chilling to think about. Guangdong Giants Huawei, Gree, TCL Are Moving to Sichuan. Is China Relocating Its Capital for War?
I would be curious as to your thoughts since you have had prior inside contacts within China. It would also explain several moves the US and other allies have been making as of late - all of them without much publicity. Things are never what they seem.
I'm curious...
Were you for or against the last major event that occurred right before COVID? I'm speaking, of course, about the Hong Kong Extradition Attempt.
I think China may have released that bioweapon on purpose for several reasons - one being to bring the protests in Hong Kong under control. Covid for the most part shut Hong Kong down. I don't know if the CCP expected it to go world wide - then again, US interests had to change an upcoming election. Much of the press here in the US was fabricated to make things appear worse than they actually were - hence, mail in ballots. The deep state US interests were in bed with the CCP regarding what was coming out of that lab. That bug was created by Ft Detrick and DARPA. There are patent contracts that date back to 2018 and 2019 showing there were several entities playing with it.
Hong Kong was/is a tragedy. The changes to the security law was the nail in the coffin. A warning for Taiwan and I think most Taiwanese can see the handwriting on the wall. Did you hear the speech President Lai gave? He stated that the ROC is much older than the CCP - so who is the motherland? Brilliant! The CCP still does not have a come back and have been silent.