Sudden and radical course changes are standard operating procedure for Trump, as, for instance, those paying attention to his maneuvering on the Ukraine conflict would know well. But by Trump standards, he seems unusually dedicated to his “extreme tariffs” scheme. After China responded to the Trump imposition of additional tariffs that took the China to 54% by promising to impose tariffs on US goods of 34%, Trump countered with a threat to increase Chinese tariffs by another 50%, taking the total to 104%. Sports fans, that is higher than the 100% he brandished at the action the US would take if China invaded Taiwan. Trump gave China one day to back down, saying the new 104% level goes into effect April 9.
As most of you know well by now, China responded with an additional 50% of its own, set to start at midnight on the 10th. Longer-dated Treasuries sold off strongly due to basis trade1 unwinds compounded by Treasury auctions this week of 10 year and 30 year maturities. Investors leery of US inflationary pressures, which at this point is anyone with an operating brain cell, would want to be paid quite a lot to eat this sort of risk.
There is the question of, in being confronted with a trade war, whether Trump has maneuvered himself into a position that is so destructive to the US as to produce a monster win for China. Trump seemed genuinely surprised that the Chinese rejected making concessions in order to get relief, and instead retaliated bigly.
To put this simply, the effect of the sudden imposition of these tariffs will achieve what the US intended with the Russia shock and awe sanctions at the start of the Special Military Operation: an economic collapse. The US had not had years of sanctions, as Russia did, to move towards becoming an autarky, nor does it have the sort of very efficient bureaucracy that was able to adapt with remarkable speed to the extreme Collective West measures.
Some, notably Philip Pilkington have argued it was a mistake for China to up the ante. I disagree. Pete Hegseth, in what was clearly an intended leak of a memo, stated that the US priority is to subdue China, militarily if necessary, as if the US actually has the capacity to do so. The US seems to believe, as it did with the SMO, that it could beat or at least weaken China with an economic war, when the US lack the means there too.
This is a terrible idea. The CCP are introducing enormous levels of uncertainty into their governance model. For what? To run a trade surplus they don’t even need that much anymore with the US. I expected a steadier hand.
https://t.co/vcPqx04tOy
— Philip Pilkington (@philippilk) April 8, 2025
The Chinese trade surplus with the US is about 3% of its GDP. China would not lose off of that; it would wind up redirecting a lot of those goods to other countries that would only welcome the extra stuff up to a point, or even sell more domestically. But China could weather the hit. Economic suffering that clearly results from US malevolence would also be unifying, while a sluggish economy due to the deflating of a monster property bubble is much less so.
Trump is proposing to make this dire situation worse by sanctioning pharmaceuticals. As we wrote in 2018 in China Rx: How the US Depends on China for Its Drugs:
The big message of [Rosemary] Gibon’s and [Janardan] Singh’s book is that the US relies on China for the production of active ingredients in drugs and in many cases, of the medications themselves, to the degree that we would have a public health crisis if supplies were interrupted. As Gibson said on C-SPAN:
Many people that we spoke to, both former government officials and some in industry said that if China shut the door on exports, within months, pharmacy shelves in the United States to be empty, and hospitals would cease to function.
And don’t assume generics king India would step into the breach. India gets many of the active ingredients for its pharmaceuticals from China. Gibson forecasts that China will overtake India in generics manufacture within a decade.
As Gibson explains, the US no longer makes its own penicillin, in part because China dumped penicillin in 2004, driving the last US plant out of business.
The medications where the US relies on China include heparin, a blood thinner that among other things is used for IV drips. No heparin, no IV treatments. Due to the difficulty in tracing the source of drug company ingredients, the authors could make only case by case investigations, but they found China production to be critical for treatments for Alzheimer’s HIV, depression, schizophrenia, cancer, epilepsy, and high blood pressure.
The only way inflicting this level of punishment on Americans (a huge spike in untreated illnesses, on top of the economic distress from sudden rises in costs and resulting spending cutbacks that will result in business failures, high inflation (conceivably hyperinflation if the destruction of productive capacity is large enough, and readers know I hate the casual use of the “h” word), and a big uptick in unemployment, is if the plan is to produce so much upheaval as to justify the imposition of martial law. But who wants to be the emperor of a hellhole?
However, China does have a major blind spot. It is clinging to the neoliberal/globalist model. The problem is high levels of international capital flows, which tend to accompany periods of liberalized trade, result in more severe and frequent financial crises. We’ve pointed out repeatedly that emerging economies looked vulnerable even before the tariff shock.
So while this sort of thing sounds all well and good:
The latest U.S. tariff hikes will essentially deprive countries of their right to development. This is particularly the case for Global South countries. It is estimated that those tariffs will further widen the wealth gap, and hit the less developed countries hardest. The tariffs… pic.twitter.com/bSrh9iFLFV
— CHINA MFA Spokesperson 中国外交部发言人 (@MFA_China) April 7, 2025
Consider this section of an editorial in Global Times:
Trade serves as a key engine of economic growth and represents the most fundamental form of globalization. The expansion of global trade has driven global economic growth and prosperity, while strengthening the interconnectedness of the world economy.
Since the founding of the World Trade Organization 30 years ago, global trade volume has grown from about $5 trillion in 1994 to $33 trillion in 2024 – more than a fivefold increase. Economic globalization has facilitated the flow of goods and capital, advanced technology and civilization, deepened exchanges among peoples, improved livelihoods, and brought about an unprecedented level of global prosperity….
In recent years, economic globalization has faced some “backward currents,” but the forward momentum cannot be stopped by anyone. In the face of the tide of protectionism, the forces that uphold and promote economic globalization are also accelerating their convergence.
China has every reason to continue to be bullish on globalization. Joseph Stiglitz pointed out that nearly all of the global reduction in poverty from 1990 onward took place in China, and that came about through the robust and sustained growth of China’s manufacturing sector.
Although much less obviously so, this view is as backwards-looking as Trump’s romanticization of the 1890s. We are in the midst of intensifying competition for resources, which among other things means more wars and less cooperation. Globalization in particularly depends on long and complicated supply chains, which means energy expenditures for transportation when the world needs to be going towards radical conservation. Global warming is disrupting weather patterns and reducing farming yields. Huge losses in animal populations resulting from bird flu is another major wild card.
So there are no happy endings here, but China’s will be much much less so than that of the US.
____
1 This really is the stoopidest strategy ever, like picking up pennies in front of a steamroller. Matt Levine at Bloomberg warned about exactly what is happening now, which also happened during Covid, on March 28:
One dumb way to think about “the basis trade” is that asset managers want to borrow money to buy Treasury bonds, and asset managers want to lend money against Treasury bond collateral, and for some reason big hedge funds sit in the middle. The trade is:
- A bond manager wants exposure to Treasury interest rates, but she does not want to just buy Treasuries, because that will take up too much of the cash that she wants to use to buy corporate bonds. So instead she buys Treasury futures, which are like owning Treasury bonds but do not require nearly as much cash.
- A hedge fund sells her the futures and hedges them by buying the underlying Treasury bonds. It is not betting on rates going up or down; it is simply clipping a fee for providing this service to the bond manager.
- The hedge fund also doesn’t want to put up all that cash to buy the Treasury bonds; it runs a pretty lean balance sheet and the returns on this trade — the reward it gets for the service it provides — are low. Instead, it borrows most of the cash it uses to buy the Treasuries.
- A cash manager (a money market fund, pension fund, corporate treasury or other cash investor) lends the hedge fund the money, secured by the Treasuries.[1] This is a pretty safe loan, because the cash investor gets the Treasuries as collateral, and those are good collateral. This type of secured loan is called “repo,” and it is a big standardized market with low interest rates that lots of cash investors participate in.
You could imagine another way of doing the trade.[2] You could imagine a bond manager saying “I would like to own Treasuries but not put up a lot of cash, so I am going to go across the hall to the money market fund manager at my firm and ask him to lend me the money to buy the Treasuries.” This is not the norm, in part because a lot of bond managers aren’t supposed to borrow money but are free to use futures. (This is called “synthetic leverage”: It’s economically equivalent to borrowing the money to buy Treasuries, but it doesn’t technically count as borrowing.) A lot of asset managers will buy Treasury futures but won’t go to the repo market to borrow money to buy Treasuries. Instead, hedge funds will do it for them; they will package the leverage into the right synthetic format for the asset managers.
It is possible that this could blow up: The hedge fund has mark-to-market gains and losses on its futures and its bonds, which should mostly offset each other (the futures are just contracts for the future delivery of those bonds, and ultimately the hedge fund can close them out by delivering the bonds), but they can temporarily move apart and cause trouble. Plus the hedge fund has to post collateral on both sides, and the collateral requirements could change: If repo lenders get more nervous, the hedge funds will have to pay them back, which could require selling their bonds and unwinding the trades. This could lead to big price dislocations, and in March 2020 it did. People have been worried about it ever since.
Your truly does not want to sound like Pollyanna, but if no systemically important financial firms or entities (think central counterparties) are seriously wounded, this will not produce a crisis, just more a big financial heave. But too many events like this can wind up impairing key players. So even if things revert to a less volatile state, that does not mean Big Finance is out of the woods.
From Levine yesterday, confirms this notion that this does not look like panic selling:
The basic fact of finance is that there are a lot of big important firms whose job is to borrow money to own financial assets. Sometimes the value of the financial assets goes down, a firm has to pay back the money it borrowed, but the assets it owns are now worth less than the loans against them. So the firm has to go sell other, better assets to raise money to pay back the loans against the assets that went down. (This is called “contagion.”) Or, worse, all of the firm’s assets are worth less than the loans against them, so the firm goes bust, its creditors seize the assets, and they have losses….
In recent years a lot of the worry has been about highly leveraged multistrategy hedge funds, which have in some ways taken over the role that big investment banks used to play, and which borrow lots of money to own financial assets like US Treasury bonds. This is called “the basis trade”…
Anyway, uh, the value of financial assets has gone down? Pretty broadly? So the obvious question is: Will there be deleveraging? And if so, where? My Bloomberg colleague John Authers writes:
If there is reason for concern, it stemmed from the bond market, which suffered an epic selloff [yesterday]. As the dollar gained a little, it’s unlikely that it was foreigners who were selling Treasuries. And as the stock market was directionless amid the drama, it’s hard to believe that asset allocators exited bonds to put money there. …
A logical but alarming explanation is that someone somewhere had to make forced sales to raise cash. … Particular concern attaches to the multi-strategy hedge fund groups that operate several different investment teams — “pod shops” in the Wall Street lingo. As the dust settles on an extraordinary day, traders will be most concerned for the health of the pod shops in their midst.
Levine does describe, however, that the Trump tariff is intended, if Trump succeeds, in ending one thing the US is really good at: financialization. And not in a “we’ll gradually skinny this down” manner either.
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‘To put this simply, the effect of the sudden imposition of these tariffs will achieve what the US intended with the Russia shock and awe sanctions at the start of the Special Military Operation: an economic collapse.’
Had not thought of it this way. So maybe a crash like occurred in 2008-09. Come to think of it, has Trump picked up the phone to ring Xi lately? Trump says that he is so great at negotiating so here is his chance to prove it by getting a deal with China. If Trump does not get a deal with Russia then the US does not lose much. If Trump does not get a deal with Iran the status quo will continue. But if Trump does not get a deal with China then all that chaos he has been spreading around the world starts to come home. Is he ready to deal with it?
THE SCHIFF TELEGRAM
Yakov Sverdlov received the order to liquidate the Tsar and his entire family, from Jacob Schiff in New York. Sverdlov then relayed the order to Yakov Yurovsky……….
In my opinion, Trump is surrounded by the unscrupulous, who are trying to finish him off, (decapitate the USA) and his family….. (for instance, JFK and RFK?)
Soooooooo, it must be, Show Time!
Yascha Levine on his site “In Bed with the Russians” has been drawing parallels between Trump and Boris Yeltsin. We know that Yeltsin’s policies led to the collapse of the late Soviet Union/Russia’s economy and over a decade of deaths of despair for ordinary Russians. Whether Trump’s similar chaotic choices will lead to the same result here is the question of the moment. USians would seem to have farther to fall, and no experience with such falls since the 1930’s.
You would think that we learned these lessons from the beginnings of the Covid pandemic. Unfortunately, the elite class that governs the ‘West’ seems to be so clueless, and our institutions that normally would be applying brakes to this kind of thing so broken, that entering the “find out” phase looks almost inevitable at this point.
Yes, a generation of “leaders” now exists for which there have never been negative consequences.
As a result of their privilege, they believe in their own rightness and righteousness.
So, yeah, its’ FAFO from here on down!
There is a belief in the US that the county’s such huge trade deficit is a bargaining chip because the US market is the greatest, most exceptional in the world. We’re getting a real-time chance to test that belief.
The current West Wing is the worst…they only (unintentionally) add napalm to Trump’s worst instincts. they can’t jujitsu Trump’s gut instincts into reasonable, constructive policy.
Lutnick, Bessent. Cue the eventual tin foil that Bessent is an anti-maga mole
I have no idea what Trumps endgame is, assuming he has one, but Izabella Kaminska (along with Pilkington) have been arguing for some time (behind paywall in the case of Kaminska), that Trump and a number of his fellow travellers have in fact been consistently flagging up their view on this for some time and that what we are seeing is his attempt to force what he sees as an unholy alliance of Wall Street and Beijing (and others) to manipulate the world trade system unfairly, as seen by the enormous trade gap. In his 2015 book (Kaminska has been twittering quotes from it) Trump set out quite clearly his view that the US should openly trade with China with minimal tariffs, but only after China stops what he considers to be unfair practices. Kaminska seems to think that the ultimate aim is to force a revaluation of world currencies to eliminate deficit/surpluses worldwide and reducing the worlds dependence on the dollar.
Just a point on trade and pharmaceuticals. It is true that the US is very dependent on Chinese base chemicals and some finished products, but the reverse is also true, arguably more so. China actually imports 45billion dollars worth of pharmaceutical products, mostly from the US and Europe (the latter to a large degree from US companies. The US imports c.12 billion dollars worth from China. The imbalance is even greater for medical devices. So the damage would be two way. You’d have to go into a deep dive into the granularity of the figures and understand a lot of biochemistry to know for sure who is the big loser in a war over Pharm supplies, but I don’t think the answer is straightforward.
As for trade as a whole, China is far more dependent on trade with the US than the 3% figure implies – trade does not clear bilaterally in todays world. Much of China’s other surplus is components which ultimately ends up in the homes of US consumers. The Chinese economy now is almost uniquely dependent on exports due to its domestic deflation. In trade wars, surplus countries almost invariably are more vulnerable than those in deficit. And there is already widespread discomfort among many Asian countries at how China is aggressively eating into their markets – they are also very dependent on the US as a consumer and are not inclined to help China eat up their existing or developing markets.
Kaminska thinks this will all clear up surprisingly quickly, one way or another (I’m not sure I follow her argument why, but its based on game theory). Pilkington thinks that China’s quick response means that Trump has essentially called their bluff – if China was genuinely as unconcerned as they have said in the past, they would have focused on the long game, rather than try to up the ante.
One would almost think that Trump has been reading Sun Tzu:
“Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.”
Or as Sun Tzu would also have said:
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
It seems to me that people are making assumptions about Trump rather than taking what he’s been saying for years seriously. He actually is a free trader if you take his writing seriously – he is just somewhat obsessed with the idea that the US trade deficit is the result of unfair domestic policy in China, Japan and Germany, among others.
I have no idea of Kaminskas and/or Pilkingtons arguments are correct, but I do think they deserve serious consideration rather than just hopping on the ‘Trump is a moron’ bandwagon.
I sure wish Kaminska was writing in a forum that an ordinary person could afford to read. I still get occasional marketing emails from the Blind Spot, but she is not as good at marketing as she is at figuring out what is going on. The emails about the content make no sense unless you’ve been reading the content.
Kaminska- I wish she were writing more, but about the same time she dropped off the map she started talking a lot about crypto. Meh
MAGA wanted a counter-revolution; Trump amd the West Wing (unknowingly and unintentionally) are delivering a revolution
Cue the apochyrphal: acts of ignorance often look no different thanacts of malice
At least two of Trump’s support pillars want a revolution and they have decided that America-as-we-know-it must be destroyed first before these two pillarloads of operators can reassemble their own revolution out of the wreckage.
The Silicon Technocrats want a thoroughly techno-feudalized world divided into realms ruled by Techno Warlords.
The New Apostolic Reformationists want a Gilead Theotyranny ruled by themselves as the Sacred NAR Priesthood.
Maybe the MAGAs are indeed counter-revolution-motivated as in wanting a return to White Power and White Mastery. But their counter-revolution also requires the destruction of America-as-we-know-it.
Trump himself wants revenge on all the people who think they are smarter, prettier, better-smelling, etc. than Trump is. He knows they think it and he is devoted to making them pay.
That is his motivation for taking over running the Kennedy Center for the Performing Arts and turning it into Trump’s Pig Palace. To rub the Kennedy Center’s traditional audiences’ faces in Trump’s feces.
there is a difference between using a steering wheel to do a u-turn (nudge tariffs, considering balance of payments surpluses from services); and just yanking the transmission into reverse (trump tariffs)….in cars from the old days before safety interlocks
All noise, AG Blondie is Grandpa Jeff Sessions in drag.
You should be writing headlines for the enquirer
“Trump has been reading” and “his writing”
There are no facts to support this, reading or writing.
To quote Sun Tsu- anyone who quotes “sun tzu” is a joke.
I have already jumped into that bandwagon and will hold fast there for now. Kaminska may have provided a rationale for Trump’s actions. She explains how his reasoning works, but this, by any means, does not imply that Trump’s rationale is remotely wise or well thought, and that the means applied are conductive to the supposed desired outcome. IMO, there is a lot of overconfidence in the US establishment on it’s strengths and little realisation on the weaknesses of US economy. It wouldn’t be the first instance in which such power projections fail to provide the desired outcome, like in Ukraine. We have also seen how difficult is for the US to change to reverse gear so this quite looks as an irreversible shift to wherever the future take us. IMO, the only bright spot here is that, without wanting it, Trump is possibly doing a lot to fight climate change. Thought i am not sure if this will compensate the extra demand from AI.
I am sorry, Trump IS a moron. Look at Ukraine and Yemen. Look at him getting the world to hate the US with his absolutely appalling blather about Gaza, the latest being that Israel “gave” prime beachfront property to Palestinians. Look at him failing at curbing the Houthis, still intending to attack Iran despite that. Even if he fails to start WWIII, he’s exhausting the weapons Hegseth says he needs for China.
The reason he won was he was running against a bigger moron and his 14 years as a reality TV star.
And Trump just blinked. He paused the tariffs against non-retaliating countries.
I had told a few people that if Trump did not back off the tariffs in at most a month, there would be a coup in at the very most three months.
Your figures as to pharmaceutical products are misleading. Those are only finished drugs. China provides many of the inputs to US drugs. From the Council for Foreign Relations:
https://www.cfr.org/blog/us-dependence-pharmaceutical-products-china
The commentaries repeatedly say that there are many important drugs where there are virtually no substitute for the Chinese drug or API.
As for medical devices and equipment, China also sources from Germany and Japan. So many presumably have substitutes.
The Chinese stock market was up before this shift, so they viewed China’s exposure very differently than Pilkington and Kaminska do.
This piece does a more systematic job of unpacking the lack of sense in what Trump is doing:
The hopeless search for Trump’s cunning plan
https://archive.is/0s2Ep
100% agree.
He’s
1. real estate guy
2. professional wrestler.
He wants rates low and the camera on him at all times. He managed to use his famousity from wrestling guy to get a reality show about him being a real estate guy.
There is nothing deeper. That’s it. Now he gets to set up matches in the oval office. See dogboy vs. Navarro. Bannon vs. prebus. Many, many examples.
https://www.youtube.com/watch?v=5NsrwH9I9vE
I forgot the most recent match- his stable boy vance vs zelensky
Vince McMahon didn’t even say thank you!
He’s a professional wrestler that got into a bar fight.
Outside of wild tariff policy, I’m sensing a lot of market manipulations trying to fill in holes.
Thank you Yves,
Even Michael Hudson called him a moron, and that is strong language coming from him. I have never heard him use a four-letter word. Richard Wolff, however, has used four-letter words to describe the idiot emperor and his policies. (I enjoy hearing the NY accent of Wolff when he gets animated)
At this point, the cognitive decline, likely drug use, and mental illness of the DT should become obvious. He just changed his mind again a few minutes ago on tariffs. He can’t even remember his own line of BS.
It is still disappointing that many will make excuses and engage in baseless optimistic speculation and wishful thinking. I would love to be more optimistic, but I see no evidence to support such an outlook.
I’ve been amused by people who think Trump just caused the entire world to blink, and we’re winning so hard right now. But those types think this administration is masterful, and nothing can prove otherwise.
The only thing this administration has shown is that they are not trustworthy partners at all.
Trump is what we’d call in Ireland a cute hoor. Cute hoors run out of road in the end, but on the way they win a lot of battles over supposedly smarter people.
With respect Yves, if someone is sick, they are not interested in biochemical inputs. they are interested in the final drugs. These are the hardest part to manufacture and the first to run out if there is a major disruption to supply. China overwhelmingly needs to import these final drugs, and the US is the dominant source of supply worldwide either directly or indirectly.
Likewise, many medical devices are highly specialised and can rarely be substituted.
China’s stock market is holding up because of massive State intervention, this is not by any means a secret.
And the US “stock market” is held up by stock buybacks, insider deals, and other shenanigans. Wall St. is our central planner.
The miasma and stench of institutional corruption fills the air, but folk done got used to it. It’s normalized
The Chinese apparently differ with that assessment, and I’m pretty sure they’ve been gaming these scenarios out for years, and have replacement strategies that they regard as adequate
I don’t understand your argument PlutoniumKun … no finished or reduced product without the inputs to make the final product. So how does that play out in the short/long term, who will feel it the most at the end of the day.
Oh and on State intervention … wowzers after the US deployed 34T in liquidity and backstops internationally post GF, whats the drama. Especially when the ideologically afflicted berated and sidelined the one person that tried to do her job and they then ideologically ushered in the unregulated insurance, bad maths, and look everyone in the car – no hands on the wheel approach.
What part of Trump/Elon and most of this camp are just plain old megalomaniacs is hard to discern. Cute Hoor maybe, but with MM$$$$ funds to drive their agendas in shaping society and geopol to their desires. There must be some old Greek or Eastern quote about questioning charismatic people. Such sorts must always be questioned more than others as they always seem to lead with it and not T/F … just optics/phraseology …
Have you stepped foot in China in the last 5 years or been inside a Chinese pharmacy in the last 15 years? You genuinely think that the Chinese don’t package their own pharmaceuticals for domestic sale (and likely for sale to much of the Global South)?
The only reason China sells raw ingredients and not finished products to the US is because of onerous FDA approval processes that Western pharmaceutical companies know how to play and game and which are inherently hostile to anything from China.
This has been my understanding since the start of the year. Trump is as dumb as his critics say he is. People trying to find a coherent grand plan are chasing a ghost. There is nothing to find, no deeper explanation, and he is as his public actions indicate. I know credentialism became a dirty word after HRC, but someone can be too inept to hold a public office pure and clean, much less the presidency.
It’s so tempting to think that, no, this is some kind of chess move. We’re in Tinker Taylor Soldier Spy, but it’s more like Burn After Reading. I had a moment a while back where it hit me all at once. It’s the simplest explanation and the one that makes the most sense.
I keep telling people who think there’s some overarching plan, some amazing game of 4D chess being played, generally people who can’t explain why he’s doing things, but they must be clever, because why would he do them… everything he does is easily explained if you recognise he’s an imbecile.
…and he is wholly unconcerned with the damage that he is doing to peoples lives.
I agree with Yves. i work as an analyst and consultant in Japan, China is its major trading partner. the US is second. But Japanese industries are offshored in ASEAN countries, which are also hard hit by tariffs. Among other things, Japan is a major producer of medical devices –medical imaging equipment of all kinds, for instance. Tariffs will raise the price of those things to the US, but China is a better and more cooperative market — as are the ASEAN countries, many of which have universal healthcare. Tariffs will encourage Japan to redirect exports to ASEAN, China and the Global South –as China is doing. Indications are that South Korea is intending to do that since US economic policy is: a.) exploitative b.) unstable. What Trump had done is undermine US economic hegemony. China will suffer a bit in the short term — but do what it always does — adapt, innovate and prosper.
We are watching in real time as Trump transfer his brilliance in business, which resulted in four bankruptcies after being given $414 million by his father Fred, to foreign affairs and international trade. Be very afraid.
Uhh, make that six bankruptcies – as well as being involved in more than 4,000 state and federal legal actions-
https://en.wikipedia.org/wiki/Donald_Trump#Legal_affairs_and_bankruptcies
OMG, what if Trump wants the US to go bankrupt so that it can get rid of its $37 trillion debt? :)
“It is true that the US is very dependent on Chinese base chemicals and some finished products, but the reverse is also true, arguably more so.”
I looked at the OEC data you linked. Just out of curiosity — how much of the $5.64B in pharmaceuticals products China imported from the u.s represents payments for intellectual property? [The $7.12B in pharmaceuticals products China imported from Ireland is also curious.] If the rubric intellectual property characterizes much of China’s pharmaceutical imports from the u.s. what would the downside be for China to ignore u.s. intellectual property rights? The u.s. consumer market “ain’t what it used to be”, and neither are the prospects for future u.s. discoveries and patents as the u.s. butchers its medical research and researchers. I believe China could defend its own intellectual property rights against most if not all countries including the u.s. — so if the u.s. stopped its trade in pharmaceuticals to China and some of the products the u.s. exported were physical pharmaceuticals how long would it take for China to manufacture them in China?
“As for trade as a whole, China is far more dependent on trade with the US than the 3% figure implies …”
I got lost in this part of you comment. How is the Chinese economy now almost uniquely dependent on exports due to its domestic deflation? How are most surplus countries more vulnerable [to trade wars?] than those in deficit? That rule of thumb seems, to me, to ill-fit the situation between the u.s. and China. The u.s. has a contracting domestic market, a decrepit, self-dismantling industrial base, and both offer little prospect for recoveries. How much would China suffer without trade with the u.s. as opposed to what the u.s. would suffer? I doubt Asian countries are alone in their concerns that China is eating into their markets — but what can they do to stop the Chinese incursions?
Trump may have been reading Sun Tzu, but I seriously doubt Sun Tzu’s advice was intended for a general of Trump’s quality. I suspect Trump’s motivations and goals are as inscrutable to Trump from day-to-day as they are to the American people, and the rest of the world — which is to say that I doubt there is any method to Trump’s madness.
Nice catch on Ireland. It’s a tax haven for IP transactions. And IT revenue reporting generally.
Unless it’s a specific license or royalty payment (such as may happen for US company owned products made in China), IP value is embedded within the product. So you can’t import something and refuse to pay whatever part of the IP value is embedded in it. What those figures indicate is that the US is importing base chemical products (or intermediate products), but China is importing high value final pharmaceuticals from the US and Europe and elsewhere. So yes, China can cripple the US pharmaceutical industry by refusing to sell the required chemicals, but in reciprocation they can’t buy the drugs they need. In other words, it’s a Mexican stand-off. The Irish figures are primarily due to US companies manufacturing their higher value (with IP) products in Europe, with the final value landing in Ireland as the HQ for some of the biggest US companies. Most of those drugs are US companies along with some Japanese. So essentially, China imports far more pharmaceuticals from US companies than vice versa.
Yes, the Chinese economy is uniquely dependent on exports. The raw figures don’t tell the true story because the very poor consumption levels in China mean that company profitability is highly dependent on exports. China is in the middle of the biggest property bubble deleveraging in history, it absolutely needs its export markets. Plus the supposed low level of exports to the US is hidden by the interrelated nature of modern trade – there is no such thing as ‘china-US trade’ – trade clears multilaterally, not bilaterally. Much Chinese trade to, for example, Vietnam or Japan is ultimately for US consumption directly or indirectly. It is the dollars unique position that allows so many countries to run trade surpluses for so long. But the flip side of this is that it has allowed multiple economies to suppress domestic consumption in order to enrich their industrial sectors at consumers (i.e. ordinary citizens) expense.
From this measure at the website you linked, China appears capable of producing almost all pharmaceutical products, ranking tenth in the world:
Product Complexity
0.71
Ranking 10 / 96
(2023)
A simple explanation for China’s apparent dependence on imports is that it currently respects the patents of foreign producers. In a trade war, such niceties might be suspended.
Thank you for further explaining your comment. What you explained is much what I expected about the pharmaceutical trade. However, I agree with Frank Dean that respecting patent rights is the primary constraint on Chinese production of the pharmaceutical products it imports from the u.s. and not a lack of capability.
Many countries are highly dependent on exports. I am not so sure China is uniquely dependent on exports. Unlike many countries, China has its own potentially very large domestic market. The promise of that Chinese market was no small attraction for the investments from the u.s. and other countries. I can understand the potential drag of China’s deleveraging real estate market as I ponder about the u.s. real estate market. However, I view the Mexican trade stand-off you suggest exists between China and the u.s. a little differently — China’s bandoleer is full of bullets in a face-off against the u.s. who holds a six-shooter with 3-4 bullets already fired and there is some doubt about the remaining bullets after the u.s. dropped the six-shooter while crossing the river to the showdown.
Your tasking me about there being no such thing as simple bilateral trade is odd. The u.s. crafted Globalization deliberately and through the workings of the Neoliberal “Invisible Hand” — which performs more than strictly Market based tricks of trade — has crafted a complex web of trade dependencies and means for tax avoidance. I would never attempt to partition trade so as to construct a bilateral trade between the u.s. and China, but that does not limit my ability to conceptualize a pair of trade aggregates that might reasonably be called the trade between the u.s. and China.
One of the things China announced it would do is “investigate” intellectual property rights.
And if it breaks patents, justified on humanitarian grounds, what pray tell will the US do about that? A Chinese court is not lkely enforce a monetary judgement under these circumstances. What it needs to do is set up small, China-only drug fabricators that are effectively out of the reach of US law.
If they really want to be cute, they could set up in Thailand, which is not a party to the Hague Convention on Judicial Cooperation which makes it difficult even to get issue notices of service, and the matter would be adjudicated in Thailand under Thai law. They would have to be clever about incorporation and duties. There are likely other ASEAN members similarly situated so as to spread the love.
Unique in trade wars I’m aware of, despite neoliberal economics being taught in the business schools there, the Government clearly views money as a public good, and has just been handed an excellent, nationalistic rationale for transition to domestic consumption.
I have no idea what is actually happening there, but a nation that’s managed to become the world’s manufacturer probably has some ideas about import replacement and some awareness of supply chains.
With the 90 day pause for every country that didn’t retaliate, I expect Trump thinks he’s got China where he wants them. Tooze had a good comment yesterday that we are having these discussions is evidence of just how much policy spending the President has, the same is true of China.
space, not spending
spotty cell connection posted when I was trying to edit
> “It is true that the US is very dependent on Chinese base chemicals and some finished products, but the reverse is also true, arguably more so. China actually imports 45billion dollars worth of pharmaceutical products, mostly from the US and Europe (the latter to a large degree from US companies. The US imports c.12 billion dollars worth from China. The imbalance is even greater for medical devices. So the damage would be two way.”
My guess is it might be easier for China to build those pharmaceutical products than for the US to make the pharmaceuticals or their substrates that now come from China. This might end up being one more own goal by Orange Man.
Trump – writer – good one for a man who is proud he doesn’t read!
I’m inclined to believe that reality is somewhere between you and Yves.
Somehow Trump has come to the conclusion that he can be a Great President by fixing our so called trade deficit issues. I also believe he’s been sold the idea that he can pay for much of his desired tax cuts with revenue from his tariffs.
That said, Trump is at best a shallow, lazy thinker and at worst a total moron with a narcissistic tendency. So, it shouldn’t really be a surprise that his administration is continually running around and doing self-harm in the name of progress. Neither Trump nor his billionaire buddies have a deep understanding (nor a desire to understand deeply) of their intended policy objectives hence Musk runs around firing critically important people only for dept’s to waste time and TRY and rehire them 2 days later; and we announce “reciprocal tariff” rates that were (likely) generated by AI with no real vetting which only days later get critiqued as using the wrong calculations in the formula.
I told my son last that Trump’s 90-day pause was nothing more than a way to backpedal his F’ed up AI generated tariffs, and moving China’s tariff to 125% was committing to the idea on fixing the trade situation that he bought or was sold at some point.
Trump and company might have thought they were playing international trade via a Sun Tzu inspired approach, but I suspect that the final outcome will likely reveal, “If you know neither the enemy nor yourself, you will succumb in every battle.”
And where I think this point is made is where you “if China was genuinely as unconcerned as they have said in the past, they would have focused on the long game, rather than try to up the ante.”
Yes, the Chinese have a documented recent economic history of playing the long game, but to assume that retaliatory tariffs against the US ultimatum not to retaliate or face consequences was an admission of trade weakness defies any understanding of Chinese humiliation by the west which started in the early 1800’s (when China was the world economic, but not military, power) and lasted well into the middle or late 1900’s. The US elite DO NOT KNOW THE ENEMY with respect to China.
So, in short we have a lazy administration trying to implement a global change in US trade policy which thinks (or thought) it could be left to AI and yet still has China in it’s cross hairs but still doesn’t understand the dimensions of chess the Chinese are playing.
Personally I just hope they bake enough cake for everyone who needs to eat it when the so called plan doesn’t go to plan and the bread runs out.
I ran this statement: “China actually imports 45billion dollars worth of pharmaceutical products, mostly from the US and Europe” through DuckDuckGo
& here is what it came up:
https://www.worldstopexports.com/international-markets-for-imported-drugs-by-country/
The number one importer of drugs and medicines is the USA at $89,784,868,000.00. Of the 100 countries listed, China was a no show in 2023.
Can you guess why I quit reading the rest of your comment?
The one thing China won’t abide is being humiliated in the way Vance and Hegseth seem to have a habit of doing. And they are in a position to respond. If China starts an arms escalation, where is the US going to get the money to compete (Reagan’s Star Wars II) If China considers Trump’s tariffs a prelude to a declaration of war, the questions to ask: can China bankrupt the US , how would they do it, and would they do it if they considered the US an existensial threat. Note: the US has a bad of habit of thinking that it can always prevail, take for example: Ukraine.
Somebody has to finance all the consumers responsible for absorbing all the Chinese exports.
Yes. The era of kow-towing to the Anglos is over. The Century of Humiliation is long gone. China is returning to its historical place as a great power. The bone-ignorant kakistocrat crew would do well to crack open a history book. Hell, even Wikipedia has it, would only take them a few minutes to look it up, but they couldn’t be bothered. https://en.wikipedia.org/wiki/Century_of_humiliation
Delusional, ignorant, hubris-filled arrogance as usual. (or maybe worse, are they all whacked out on cocaine, or meth?)
In one of Trump’s recent musings, he claimed he was a “student of history.”
My guess is that Xi Jinpeng is making a few phone calls to Putin, and we’re about to find out what “no limits partnership” really means.
Ansar Allah could always use some more money, weapons, and training.
And it would be a real shame if a bunch of ISR satellites monitoring Ukraine got suddenly “Keppler-ized.”
“The latest U.S. tariff hikes will essentially deprive countries of their right to development. This is particularly the case for Global South countries. It is estimated that those tariffs will further widen the wealth gap, and hit the less developed countries hardest. The tariffs…” pic.twitter.com/bSrh9iFLFV
— CHINA MFA Spokesperson 中国外交部发言人 (@MFA_China) April 7, 2025
“Development is a right for all, not a privilege for a few. Countries need to come together to uphold true multilateralism, oppose unilateralism and protectionism of all forms, and safeguard the international order with the UN at its core and the WTO-centered multilateral trading system.”
Some may think this is a perfect time for BRICS + to step up.
RE: “Trade serves as a key engine of economic growth and represents the most fundamental form of globalization.”
Regarding that and the rest of the quote, not all “trade” is the same. For example, Angola (which I know a little about but am far from an expert) used to export crude oil into the world markets, where it was refined and then came back as a finished product. That type of trade is very exploitative, and it made a few people rich. I would guess that it did not much help the average Angolan who wound up paying more for fuel than they might have otherwise, leading to increased costs of other goods as well. The average Angolan remains poor. So now Angola is taking steps to refine their own fossil fuels. That results in a little less “globalization”, at least as far as refining goes. But perhaps the decreased fuel costs that could result will make other finished products Angola could produce more attractive.
My point here is that the West and China seem to have different ideas of how “globalization” should work. The West wants to be top dog, grabbing raw materials on the cheap, often through coercive means or outright war, and locking in massive profits for them at the expanse of the rest of the world. China seems to be operating under the philosophy that a rising tide lifts all boats, cooperating with other countries to build infrastructure that boosts both sides economically. I do remember Varoufakis saying how China was more than willing to renegotiate their deal with Greece when it turned out not to work as well for the Greeks as originally hoped. The US tends to like to sell off debt for pennies on the dollar to vultures capitalists and let the poor countries twist.
I aware that China is no saint of a country, but I’m talking about general overall tendencies here. If I’m being overly naive about this, please feel free to correct me.
Whether China is a different animal than the US or just playing a long game as a wolf in sheep’s clothing, it is very clear that they have both watched and learned from America’s boorish and arrogant extortionist behavior.
We do not have allies anymore we have vassals, well except for Israel where there is a real question who is the vassal. And most of those vassals, especially those which are the most resource rich, are very likely chafing at the bit. “Our” latest actions are just tip of the iceberg. China will reap the rewards.
LOL
90 Day Tariff Pause (except for China) (via wtop.com)
Mr. Market is tumescent … LOL
I have never even once played the ponies for my own benefit, but if I was holding, I would liquidate, lol, the market’s getting senseless due to whiplash. There’s going to be a reckoning when the Adderall runs out.
He’s already spinning it as a “win” too (via Newsweek) … :)
That’s exactly what the big players want. All the little people scared out of the market so they can scoop it all up.
It’s not the stock market drops that scare me. It’s the irrationality behind stock market rises that truly frighten me and make me want to put my life savings into gold bullion and bullet.
“Mr. Market is tumescent”
Of course it is. Trump just put on his kneepads and gave it a “Monica Lewinsky”
Donald J. Trump – market “fluffer.”
One more thing-
How much bureaucratic BS paperwork was just required, then thrown in the trash over the last month?
Gotta be billions of pages, now on hold?
Trump is a moron and a bully. And yes, a lot of people supported him for idiotic and self serving reasons. Some might even get what they wanted. But I am going to say that his stupidity and his ability to make this big an *$$ of himself is directly the result of our dysfunctional political system. As Yves says above he was running against a bigger moron, who was the replacement for a cognitively impaired moron, who took over for a corrupt gangster who was also in many ways an idiot. Our Congress has been unable to accomplish much but rename post offices except when their oligarchic owners desperately wanted something for over two decades that I have been watching intently. We may not know who the bureaucrats in the background are, but there isn’t much evidence that they are not more Peter Principle examples than our elected officials are.
My point being isn’t just that Trump wouldn’t have been elected in a functional society, or that in a truly functional government his largest moronic actions would be being blocked however true. It is that he is the most glaring example of just how deficient our government is. If you can name two or more truly competent top elected or bureaucratic government officials I bow to you. I can’t. I do not believe the focus for this and other current and coming debacles should entirely be Trump. He might be in the spotlight, but it is a bipartisan and sponsor smorgasbord of idiocy, ideological hypocrisy, and incompetence in action.
C’mon now, don’t sell Congress short. When the story of steroids in baseball broke, they hauled players in tout de suite! (even though they had zero reason to do so and there were many more pressing concerns).
https://oversightdemocrats.house.gov/legislation/hearings/committee-holds-hearing-on-steroids-in-baseball
Kidding aside, when you run the electoral system like a reality show for decades, nobody should be surprised when the reality show guy wins.
Sammy Sosa won the Oscar / Triple Crown:
Steriods
Corked bat
Can’t speak / understand English
” I do not believe the focus for this and other current and coming debacles should entirely be Trump. He might be in the spotlight, but it is a bipartisan and sponsor smorgasbord of idiocy, ideological hypocrisy, and incompetence in action.”
Thank you, Pat, for your excellent comment. Your last statement says it all; focus needs to be on ALL of the culprits, not just Tman. He’s a symptom of the systemic rot, not the cause.
Sing it!
I thought the election of a third rate movie actor/corporate front man was the nadir of US electoral politics, but it just kept getting worse.
Remember Jr Bush
https://www.mirror.co.uk/news/world-news/classic-daily-mirror-us-election-front-1421769
Good Times it was
I was just today wondering how many people I can alienate by reciting “the Democrats are complicit” constantly. At least some people are starting to view the party apparatus with more suspicion, but I don’t know that they wouldn’t snap back in line once that party has more power again.
Precisely. Trump is a morbid symptom of a neoliberal disease that is far bigger than any individual person.
I think you nailed it. It’s not like Trump had to be competent to become the President of “the greatest country on earth”. OK, Obama was pretty slick, and at least electable. But Hilary, Biden, Harris and Trump couldn’t have been elected as dog catcher in Moose Jaw. There is no reason to overthink this.
Shopping at Costco today reveals I am not the only person thinking that nothing is going to be any cheaper in the future, might as well stock up now.
The place was jammed.
There’s also a small movement of people boycotting giant sellers like Wmt, Amz, Tgt, and some are running to Costco which supposedly at least doesn’t treat their employees like dirt.
A pause solves nothing, just like any negotiations under pressure during the pause solve nothing. Chinese shipments are already returning or being trashed, US citizens are already stockpiling anticipating shortages.
A Covid outbreak like shock has been transmitted to world trade.
Large companies will do nothing for 90 days except try to guess which way the pendulum will swing. Chinese trade exceeded US trade last year $6 trillion to $5 trillion already and wild actions like this will only accelerate the long term trend.
We all know that US gov. finances are a problem which only two actions can remedy, raise revenues or give up the Empire. Hail Mary’s like this show nothing but incompetence.
I listened to “Fast Money” on my way downtown and the crew basically agrees. Melissa Lee, Guy Adami, and other CNBC analysts (except Rick Santelli who sounded like Trump) seemed perplexed on how any CEO will hire, invest, or spend on Capex with this hanging over the economy for another quarter.
Normally, after a 12% Nasdaq rally, they’d be drinking the Dow Jonestown Kool-Aid, but give them credit, they’re a hard “no thanks.” Big surprise and made me think this shit-show is only in the early innings.
Exactly. This is not the way to reshore manufacturing. Why would you invest, particularly under financial capitalism? They’ll just wait this out for 4 years, and that will be the end of the tariff regime, if indeed it lasts that long.
This year is truly mind bending.
nyleta: We all know that US gov. finances are a problem which only two actions can remedy, raise revenues or give up the Empire.
If you give up the Empire, then you lose the global reserve currency in all likelihood. Don’t you think? So that means either way the writing is on the wall for the US. Period.
An x-president may say, “it all depends upon the definition of a ‘happy ending’”.
There’s going to be a happy ending … for someone.
The pause is not for China, which is up to 125% now according to what I just read on BBC News. Ray McGovern and John Helmer were just now talking on Nima Alkorshid’s Dialogue Works YouTube stream about how the court is going to have to deal with its emperor problem and that Putin and Xi should accommodate the likelihood that he won’t be around for very long.
I spent the whole day trying to find out if Vanatau was in the list of “70 countries begging for forgiveness”, but I could only identify Japan, South Korea and Vietnam. /s
Courtesy of RT:
09 April 2025
21:21 GMT
Asked about the prospect of raising tariffs on Chinese goods even further to pressure Beijing into negotiations, President Trump said the current 125% levy is already a “significant number,” and he can’t imagine increasing it any more.
“I can’t imagine it. I don’t think I’ll have to do it,” Trump told journalists in the Oval Office. “I don’t think we’ll have to go higher – you know, we calculated it very carefully.”
…
22:40 GMT
Asked whether certain American importers could be granted exemptions during the 90-day period, Trump said the administration would evaluate requests on a case-by-case basis.
“Some [companies] get hit a little bit harder, and we’ll take a look at that – just instinctively, more than anything else,” he said. “You almost can’t take a pencil to paper. It’s really more of an instinct.”
Any illusion that Doggie was about Government Efficiency has been dispelled and any illusion that the Trump Administration is competent has been dispelled by the Signal Chat and AI written trade policy.
Trump has screwed too many of his former allies, including the Military.
He is 78 years old, has reputedly been using adderall for years and his actions are those of someone with an existential need to dominate while lacking the means and ability to do so.
No brakes, no reverse gear.
The majority of Americans are living on a financial knife edge ( I am) and any appreciable increase in inflation will leave them and their children unable to afford the most basic food and shelter.
They will have nothing to lose and a whole lot of guns.
If you then plan to enact Martial Law alienating the Military is not a good idea.
If someone consistently acts in a manner that no intelligent or rational person would, they are telling you what they are, delusional and stupid.
From X (receipts included):
https://x.com/KobeissiLetter/status/1910032040130666922
“if Trump succeeds, in ending one thing the US is really good at: financialization.”
That would be a good thing – my question is given
“At 9:37 AM ET today, President Trump posted that it’s a “great time to buy.”
“Then, at 1:18 PM ET, Trump posted that he is PAUSING tariffs for 90-days.”
Who got the benefit of insider information to play this turnabout on a leveraged basis?
because “the US is really good at: financialization.” one would think that it was known quanta of what these policies would do to the market and any frontrunning knowledge of this pause would be known as well
Well, looking forward to the greatest ever day on Wall St when Trump manages to barely avoid WW3.
I think China has been preparing for something like this for at least twenty years. They will just wait til Trump is gone. They’re in no rush. BRICS has been making steady predictable progress. Trump has made doing business with America a crap shoot. They are not interested in that.
Bummer.
I am not sure that Trump (or whoever is handling him) capitulated yesterday. I think the goal was always about trying to isolate and tariff China and talking about sanctions for everybody else was a way to scare some concessions out of them, distract people from everything else he’s doing, and front run the market for his family and friends.
I saw this chart on Reddit yesterday – https://www.reddit.com/r/wallstreetbets/s/s2oQ76znCq
Trump is a pathological liar and is extremely intellectually lazy, but he has a definite cunning that lets him outplay people who look down on him.
That’s right. It’s a fantasy that manufacturing can be brought back to the US.