China, tariffs, trade war – hello, America!
Big Red Car here on a gloriously sunny Thursday contemplating recent developments in regard to China, tariffs, and a trade war.
China is a bad actor and has been for years. They have been stealing American technology – both from an espionage perspective and an industrial/commercial perspective – for half a century.
But, it is not just the “big stuff” like software, hardware and military gear.
China, tariffs, tradewar – background me up, Big Red Car
When the student is ready, the teacher will appear.
1. China is the home to 88% of all the counterfeit goods produced on the planet.
Consider this for a second – how can a sovereign nation be the sole location for 88% of all counterfeit goods without political approval at the highest level?
Know that counterfeit goods displace the sale of legitimate goods. You buy a knock off Polo shirt? You don’t buy a real Polo shirt, no?
2. China does not recognize, enforce, respect patents and pharmaceutical formulae. They just steal this stuff.
American company spends 10 years and a billion dollars developing a wonder drug? China reverse engineers it, knocks it off, has it in the marketplace in less than six months at 10% of the price or as a counterfeit posing as the real thing at full price.
[Comment about counterfeiting – when a counterfeit is produced, the bad actor can decide to market it as a “knock off” or as the “real thing.” When they market it as the real thing, they commit a second crime. Other than the Prada bags on Canal Street in NYC, many Chinese counterfeits (particularly building materials like bolts) are passed off as the real deal.]
3. China requires American companies to divulge their intellectual property, trade secrets, confidential information, customers, proprietary information as a condition of doing business in China.
No disclosure? No permission to do business in China. It is grossly heavy handed.
4. China requires American companies to take on a Chinese partner who – wait for it – steals the tech for them.
5. None other than President Xi Jinping has announced a formal program called “Made in China 2025” which is the codification of attempts to “assimilate and absorb imported technology for the benefit of China.”
Yes, that is the government’s imprimatur for the wholesale theft of secrets. From the President-for-Life himself.Don’t believe me? Read this.
China, Tariffs, Big Red Car?
So, the United States, has been complaining to the World Trade Organization about Chinese bad behavior since 2001. Nothing happened.
[The WTO is where you go to complain about counterfeiting. They have done a good job against other countries for counterfeiting, not China.]
You cannot get people to change their behavior if there are no consequences.
1. On 6 July 23018, the United States imposed a 25% tariff on $50B of Chinese goods. [Does not include the 25% steel tariff or the 10% aluminum tariff from March 2018.]
Senators Chuck Schumer, Marco Rubio both applauded it calling it a “theft tax.”
The US called the Chinese out saying their actions were necessitated by wholesale “forced technology transfer and intellectual property theft by the Chinese.”
This kind of in-your-face confrontation is something I like about the Trump administration.
2. The Chinese retaliated by announcing a tariff on $50B of US goods.
3. The US, volleying at the net, enacted a tariff on an additional $200B of Chinese goods.
4. The US has threatened an additional $200B in tariffs.
Thereafter, the Chinese complained of the US “provoking a trade war.” Huh? We’ve been at war over trade with the Chinese for half a century. [From before Nixon opened China in 1973.]
Until President Trump took this action, Presidents since Ronald Reagan “talked” to the Chinese, but did nothing.
Give me some numbers, Big Red Car
OK, dear reader, here are the numbers.
China imports $130B from the US.
The USA imports $506B from China.
The USA-China trade deficit is approximately $375B.
So, dear reader, who has more at stake here? Who has the upper hand in a trade war?
The US consumer buys 88.5% of what it buys from domestic sources. This is an important point – the USA can do without what China sells us in our $19T US GDP.
Again, we import $506B (billion) from China as part of a GDP of $19T (trillion).
To be fair, remember that China holds more than a trillion dollars of US debt which is approximately 20% of all outstanding US debt.
Why I Appreciate President Trump
The world’s leaders are 0.323% doers and 99.677% bullshitters.
President Trump is a doer. Today, I explained to someone that President Trump is not a conservative; he is a pragmatist.
He is unafraid of a fight. If you come to his house and steal the silver, he will slap you silly.
This is a fight which is way overdue. Time to stop kicking this can down the road – like North Korea, you say? Haha, yes, you are right.
Game the fuck on, y’all!