Written by Michael Thervil
On the surface, when it comes to American President-Elect Donald Trump, the idea of applying tariffs on Chinese goods and products sounds like a great idea that stops China from flooding the American market with cheap goods that undermines American manufacturing according to Trump and others, both of which seem to devalue the national economy of America. However, when you are looking below the surface, it's easy to see that the current economic situation that America is finding itself in is not exactly China’s fault.
Truth be told, it was the Americans that gave away both their manufacturing and economic power to China decades ago for the sake of having easier lives and for the ability to purchase cheap products. China, once an underdeveloped nation riddled with poverty, has over the decades turned itself around to not only be known as “The World's Factory”, but a true nuclear and economic superpower. And because Americans for decades fell in love with the cheap products that China manufactured and shipped to America and all over the world; they failed to see that their love for China in this aspect slowly socially engineered them to become so dependent on China to manufacture their goods and products that, they became blind to the fact that decades down the line they would be so dependent on China that they would never be able to decouple from China in the absolute sense.
Hence, this is one reason why President-Elect Trump's idea of slapping tariffs on China will backfire in the long run. On top of that, the world has changed so much, that China and other political pundits around the world are wondering if the applications of tariffs of any kind on any developed nation are even worth anything in terms of either persuading or stopping a nation from fully embarking on actions that America and the Collective West find distasteful. If President-Elect Donald Trump wishes to place a 10%, 100%, or even 1,000% tariffs on any Chinese made goods or products in this day and age; than China will simply sell their goods and products to every other country in the world that wishes to do business with China.
In the long run, President Trump’s tariffs will only allow China to take a much larger portion (if not nearly all) of the market share when it comes to global trade and commerce. This is due to the naturally occurring “ebb and flow” or “hidden hand” of the market. The scales of international commerce and trade must be ultimately balanced, even if they were initially artificially tipped in one way or another in the beginning or at a later point in time.
Our prediction at VEDA Communications is that as President-Elect Donald Trump engages in the application of draconian tariffs on China, he is only going to make China do business with the rest of the world that sees the value in what China can bring to their economies and the lives of their citizens. As countries that are willing to do business with China become more and more accustomed to conducting international trade deals with China, the less the countries that form international trade agreements with China will desire to do business with America. This is because when it gets to that point, America will have lost the last bit of commercial relevance to those countries who welcome China with open arms.
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