In an era of globalized trading, the idea of “decoupling” from another nation’s economy, totally cutting off all economic dependencies, is a tall order. Nowhere is that more of an issue than with the United States and China, with over $600 billion in annual trade.
After damaging trade wars with China, and a day after Trump’s top trade adviser said complete decoupling isn’t a “reasonable policy” that could actually be considered, President Trump is still insisting it remains an option that is on the table.
Saying it is an option and actually doing it are two different things, and for the world’s the two largest economies to totally disconnect from each other would create economic devastation on a global scale. The US would almost certainly take the worst of it, trying to replace things imported from China without anyplace else actually making them.
That it is talked about at all reflects President Trump’s skewed view of trade as a zero-sum game, and the idea that if the US doesn’t import $500 billion of goods from China, they will be $500 billion ahead. This folly has driven a string of trade decisions throughout his first term.
Beyond the presumption that advisers who know better will talk him out of it somewhere down the road, continually raising the idea is risky to US diplomacy with China, as it gives the impression that America is a very unreliable partner, potentially leading China to take rash action to protect themselves.
Let us see. Pompeo: Surrender.
China: No.
Then around and around for six hours. Then, Pompeo: We will settle if you privatize your public corporations, with US having the right if first refusal.
China: No.
Pompei: Last offer, open up your financial services!
China: No.
Pompeii: OK, need to consult my bioss.
China: Sure, tell him, the answer to his next proposal is very likely no.
Goldman Sachs and Morgan Stanley were already on track to become the first majority foreign-owned Chinese venture funds.
https://www.reuters.com/article/us-morgan-stanley-china-idUSKBN21E1AO
Mogan Stanley just got the nod; unless Pompeo was over in Hawaii for some hangup with Goldman Sachs, the meeting can’t have gone that badly.
https://www.reuters.com/article/us-china-markets-futures-jpmorgan/jpmorgan-gets-chinas-nod-for-first-fully-foreign-owned-futures-business-idUSKBN23P1J9
… Trump must be trying the throw the election… sinophobia only goes so far before it cuts into too many people’s real incomes. Some Americans may dislike China, but enough need Chinese business.
Few if any Midwestern farmers would want to decouple from the China market.
In fact few producers of any U.S. agricultural commodity would want to decouple from China; the trade war pain has been financially fatal for too many.
Nor will the New York financial markets, for that matter.
Best to cut losses and concede the trade war didn’t work, but Bolton alleges Trump approached Xi for help on re-election. This seems to be a way of psyching out Trump so he doesn’t flip on sinophobia.
https://www.reuters.com/article/us-usa-trump-bolton-book-idUSKBN23O3B7
Great plan on Trump’s part; ask for help from China for his reelection than screw them with sanctions and talk of decoupling the economies. Makes sense to me… 🙂
Worked for Obama; he messed with Putin, promising everything would get better once re-election pressure was over.
Xi isn’t falling for that, and demanding results up front. A lot of what Trump is doing is ambiguous, but based on the actions of past presidents.
Reagan’s maximum pressure campaign against the Soviet Union seems to particularly inspire Trump policy, but he’s borrowed heavily from the Obama playbook as well.
Still, a real contender for Presidential office talking up withdrawal from the 9/11 wars keeps the message alive better than none or reduced to fringe party sentiment.
Trump only knows gangster methods, there he and Pompeo are much alike.
“America only knows gangster methods….”
My edit 🙂
“Governments only know gangster methods…”
To bring in line with the lived experience of every human for past few thousand years
Congrats, America, you elected a clown. Unfortunately our choices this election year are the Clown or an addled-brain, paid-for octogenarian.
… All U.S. Presidents have been Jokers of some sort.
They just differ in the ability to get the masses to laugh and clown along with them.
Obama was a master.
decoupling ? Who is threatening who?
Jesus christ.
He is doing this to prep us for the war against China.
What trump knows about decoupling in business is this…stop paying creditors, go bankrupt. Is there another plan ?
That’s the American Way for billionaires including Soros and the rest of ’em.
Trump will do as he has always done; change his mind within 24 hours. However, the US must redevelop its manufacturing sector so as not to rely completely on international trade. We saw how that went with the COVID-19 outbreak and the federal government’s abhorrent response to it.
And the odds That Trump is bluffing? Oh I don’t know 100%, 99% at least. It’s funny how Trump says these things in public but never in private. In private he says over and over that he wants reduced tariffs on all American goods and is willing to drop ours if they will comply. So sure, he’s a protectionist but I don’t see any evidence outside of his public stance, that he sees trade as a zero-sum game. His public, for the base, talking points say one thing and his actual actions have said something quite different.
What he has done is to scapegoat China in the same way he has used Mexican laborers as scapegoats and that plays well with his base. Americans of today love to point fingers and blame other nations and other people for our problems, Trump isn’t opposed to giving his base the chance to do just that, he does it at every opportunity. That’s not to say that over-reliance on China isn’t a real problem.
In the end the US will remain far too dependent on China but to a lessor degree as our supply chains become more dependent on other third world nations to produce our imports. And honestly, who here is in favor of being dependent on an insane Commie government for everything? Should we be reliant on a Nation who treats it’s people the way they do? Should we have ever put ourselves in a position where we are dependent on ONE non-capitalist nation to supply our country will so many of life’s necessities, especially medical/pharmaceutical ones?
I know that anti-war people tend to want to look at the US government as the only threat around but that’s such an incomplete view of the world. China’s government sucks rocks and is one of the few major powers that actually does have a government worse than ours. The American people should never have been put in a position to be so completely reliant on them in the first place.
Free trade is one thing, dependency is another and we shouldn’t rely on any single nation to provide us with medical necessities the way we have. Being friendly and trading with everyone isn’t the same as putting ourselves in a position where another country could essentially blackmail all of us. Dependency on a communist nation is not my idea of how to create a nation for ourselves that is more conducive to liberty. In fact it puts us in a position where we could quickly be economically enslaved by these same commies.
I’m in favor of decoupling if what that means is that we are reducing our dependency on any single nation. We should encourage a supply chain that can’t be shut down by any one nation, especially not one that has the human rights abuse record that China does.
China isn’t the good guy simply because this week they look like a possible Trump foil.
The problem is, there’s no way to build even partial U.S. autarchy without Chinese trade.
All U.S. globalist goosing of Trump’s China trade skirmish into a major war has accomplished, is to ensnare both the U.S. and China into a middle income trap for the benefit of Europe.
China may not be allowed to rise… but neither can the U.S. prevent American decline, whereas before, both prospered and approached their natural economic places in the world.
China appeared to benefit more, only because they were so backwards to begin with. The U.S. was not truly in decline; the rest of the world was simply closing the development gap, which would naturally erode hegemony.
However, as the sole nation on a Mackinderan heartland, the worlds second such heartland, the North American Great Plains, the U.S. was always naturally the premier world power.
Decoupling is essential to war on the former economic partner. It can’t be both ways.
US neocons and interventionist hawks have always intended war. They just go from war to war. Cold War 2 with hot wars as much as possible is the plan, the excuse for military expansion forever.
Hitler complained his generals had no understanding of the economics of war, when they kept pushing for Moscow while he wanted to take Caucasus oil first.
When ex-Nazis and their American fanboys become the American Deep State, they brought no small number of habitual mistakes with them.
China has responded to President Donald Trump’s recent threat to cut ties with Beijing, warning that the move “will only hurt American citizens.”
China kind of proved that when they went for the jugular from the onset of trade war and cut off American farmers, a formerly substantial component of the Trump base, from the Chinese market.
All the Trump trade war with China has accomplished, is the decoupling of the rest of American middle class economy from the benefits of China.
Hard to remember, Trump seemed only to intend a trade skirmish to extract concessions. then the Senate shot the ZTE hostage. The threat of a Chinagate to go along with Russiagate made Trump blink.
Offshoring did a lot of damage, but American workers and entrepreneurs had only just recovered, adapted, and began to prosper, when the system was crashed yet again to accommodate the most connected rich of the financial classes.
Pompeo demands Europe ditch trade with China and choose FREEDOM ( unipolar world ) over TYRANNY ( multipolar world ) (in favor of US)
The diplomat ( gangster ) denied he was forcing Europe to choose between the US and China as allies.
Or, Europe and Trump are playing good cop-bad cop against China and Iran.
Either way, Europe wins as the giants bleed one another down in size.
Hell yeah!
How can you decouple with China when you import almost everything from China. That is a no brainer, unless …