Tariffs Are Not Advanced by Breaking All the China

Don’t confuse the headline with breaking the Chinese nation,

I’m using the more common reference to bulls in china shops. Bullshitters in

china shops will serve equally well.

Personally, I’m in favor of

tariffs when they’re used responsibly to promote national interests and level

certain playing fields. Economic responsibility pretty much went down

the toilet when globalization made the economic world a flat-earth society.

But our current bull(shitter) is

named Donald and he dropped a huge and amazing pile of bull-shit right

in the face of our major trading partner. On a whim. Without a clue.

China, the American diplomatic Service and all its associated agencies, the

media, as well as you and I learned about it on Twitter.

Who runs a nation on Twitter? Yet

that’s how this dude runs diplomacy, shooting from his uneducated hip directly

to a social media site.

In 1972, Richard Nixon and national security advisor Henry

Kissinger opened China to the world economic community and steered a communist

nation toward capitalism. Nixon called it ‘the week that changed the world’

and he was not wrong.

But that surprise announcement was

no surprise to either Chinese Premier Zhou Enlai or Chairman Mao Zedong. It

followed months of secret back-channel negotiations that offered

once-in-a-lifetime benefits to both nations.

Our own shitting-bull let loose the demons of huge price

increases to American consumers (who will actually pay the tariff),

unsettled trade alliances with China’s other trading partners, as well

as ripping up long-standing Chinese agricultural agreements with American

farmers—along with god knows what else.

The shit-pile continues to steam,

the unknown result of a single thoughtless dump on international trade.

Probably someone at Fox News thought it was a good idea.

One can’t blame a bull for shitting,

but you can certainly blame an American President for doing the same.

Our leader is so ignorant of the facts that he has now

graduated from fake news to alternative facts. There is no

such thing as an alternative fact. A fact remains a fact. New

information may change what was once a fact, but there are no

alternatives unless that happens.

Yet our current man-at-the-wheel boldly states as a fact

that China will pay the cost of tariffs against their products. That’s a

lie, somewhere among the 11,000 (and counting) in the  2 years, 206 days, 7 hours, 16 minutes and 33

seconds that mark the writing of this line.

Let’s try to get a sense of who pays tariffs.

Let’s say you plan to buy a Volvo

automobile that’s manufactured in China. In China? You kidding

me?

Nope. China manufactures many

foreign brands, including Volvo, Daimler-Benz and General Motors. The latter

makes numerous cars in China in four factories, especially Buick, but also some

Chevrolet and Cadillac models. Honda, Toyota and Nissan also have

joint-ventures. BMW, Jaguar and Land Rover are in the game as well as Buick and

Ford.

GM sold 4 million cars in

China last year, a third more than in the American market.

So let’s suppose you’re looking at a Volvo. Sweden and

Belgium still make a few, but Volvo is now owned by Chinese motor manufacturer

Geely Automobile. They bought it from Ford, so it’s been a while since Volvo

was under Swedish ownership, but it’s a nice car you’re looking at, selling for

$30,000.

But suddenly, when you go to the

dealer in Chicago the Trump 25% tariff prices the same car at $37,500. You quickly

have second thoughts and who could blame you? The Donald promised it wasn’t

going to cost us—the American buyers. Well, let’s chase that down.

China doesn’t pay that tariff. The Volvo manufacturer

in China invoices it and the dealership in America pays it. And

he doesn’t even get to keep it, he has to send it off to Washington and they

keep it. So he can’t eat it, it has to go somewhere (aka the US

government) and you (the buyer) has to come up with the dough. You are

certainly not going to do that, so the American owned dealership goes bust. All

it’s American employees go home, looking confused (who could blame them) and

wondering how to find a decent job.

There’s more fallout.

Chinese motor manufacturer Geely

Automobile is not all that happy about losing their American market and neither

is the Chinese government. So they slap a retaliatory tariff on American

cars, no matter where they’re made, even in China. They can do that.

There goes a 4 million car market

for GM. All because of a Tweet followed by a lie, followed by an alternative

truth.

Take the same trail of tears to other American markets. US

farmers now have no market in China. China is among the top export markets for

U.S. major agricultural commodities: #1 in soybeans, feed, animal hides,

alfalfa; #2 in hay; #3 in dairy, poultry; #4 in processed food, pork, beef and #5

in wheat. They didn’t need to bother with tariffs, China simply stopped

buying when Trump announced his plan. Now over $12 billion in American soybeans

have nowhere to go, with another crop on the way and no available storage

facilities.

How do Wal-Mart, Amazon, Apple and

every major retailer in America deal with this? Virtually everything today is

manufactured in China. While it used to be that gadgets, gizmos and other

products were made in the U.S., Taiwan or a brand's home country, businesses

are now outsourcing mostly to manufacturing facilities in China.

It’s called globalization, but it’s

really a stampede to the lowest cost source.

Chase all that down to your own purchases and see if a

tariff war really serves you well.

And while we’re at it, there’s

another issue. Seems these days there’s always another issue.

The global economy is extremely

fragile at the moment. China has problems of its own and the American economy

smells and sounds very much like the years leading up to the 2008 disaster.

Europe is facing its own downturn.

The powder is dry and it wouldn’t take much of a spark (or a

Tweet) to explode.