There is a good article in today’s Wall Street Journal that tells us all the reasons why China doesn’t just sell off Treasury notes and allow the US to strangle. They own 8% that can be traced to them, (and much more through beneficial ownership), but if they sell it off the US would not be buying nearly as much from China. The whole piece is very good reading.
What they did do instead, which the Journal commented on its opinion section, was allow its currency to devalue a little - enough to get our attention - and offset the tariffs the US imposed. Tariffs or no, they win with this strategy. It took only a week to convince the US that it was not such a good idea to do tit-for-tat tariffs. That puts China back in the lead on negotiations. We can’t beat China on our own. I don’t like saying it, or even thinking it, but the President is right that the world has allowed China to prosper giving it breaks and help and allowing it to become a world power in trade, yet globally, we still act like it is a third world trading partner. When will that end?
The US President announced $200 million in new tariffs today. Let’s see how that goes.
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