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Threats and Sanctions Everywhere – A Chronicle of Disorganized Chaos Foretold

15 9 0
15.05.2019

As of May 10, Mr. Trump has arbitrarily increased tariffs on Chinese goods imported into the US, worth about 200 billion dollars, from 10 % to 25%. It is an action without any foundation. An action that makes no sense at all, as China can and will retaliate – and retaliate much stronger than what the impact of the US’s new “sanctions” bear – because these arbitrary tariffs are nothing else but sanctions. Illegality of such foreign interference aside, there is hardly any serious economist in this world, who would favor tariffs in international trade among “adults” anywhere and for any reason, and, of course, least as a punishment for a nation. All that such sanctions do is pushing a partner away. In this case it’s not just any partner; China is a key trading partner of the United States.

The new tariffs will hardly harm the American consumer. There are huge profit margins by US middlemen and importers of Chinese goods. They are competing with each other within the US – and the consumer may not even notice a thing. However, the US economy will likely suffer, especially from Chinese retaliatory actions.

A spoiled child, what Trump is, doesn’t get his way – and goes into a tantrum, not quite knowing what he is doing, and knowing even less what he may expect in return. Mr. Trump himself, has not only reached a level of incompetence and ignorance which is scary – but he has also surrounded himself with inept, preposterous people, like, Pence, Bolton, Pompeo – who, it appears, have no other means left than running around the world amok, dishing out threats left and right – and spending billions on moving aircraft carriers around the globe to make sure people are afraid of the great-great the United States of America.

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Back to trading with China. China has a million ways (almost) to retaliate. China can devalue her currency vis-à-vis the dollar, or China can dump some of their almost 3 trillion dollars-worth of reserves on the money market – just take a wild guess about what that would do to the hegemony of the dollar which is already in dire straits – with ever more countries departing from the use of dollars for international trade.

And just hypothetically, China could stop........

© New Eastern Outlook