Trade war won't be over even if trade talks end "successfully"

Jun 2013
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1. The US is demanding "deep structural changes" in the Chinese economy under the constant threat of new or more tariffs on more Chinese goods. Trump and company are under the illusion that China is so afraid of more tariffs that it has become a weakling to be kicked or pushed around.

In fact, the billions of dollars generated by US tariffs on China are paid ultimately by US businesses and consumers. Hence more tariffs on more Chinese goods will bite the US deeper and harder than China. For instance, the cost of toilet paper will rise so high that many Americans will end up wiping their bottoms with their hands after doing their "big business" in the toilets. In addition, Trump may have to run his 2020 reelection with less MAGA hats as they will become more expensive due to higher tariffs on China.

The term "deep structural changes" is very vague. Now the US insists on "deep structural changes" in the Chinese economy. Very soon, it will demand "deep structural changes" in the Chinese government, the Chinese political system and even the Chinese military.

2. If the US announces that the trade talks have concluded "successfully" (for the US only) after extracting whatever concessions it has demanded from China, don't be naive to believe that the so-called trade war is over for the following reasons:

(a) Trump said that he will maintain tariffs on Chinese imports for a "substantial period of time" even if he strikes a trade deal with Beijing to make sure China complies with a potential agreement to reduce trade barriers. White House economic adviser Larry Kudlow, however, contradicted his boss by saying the US could lift some tariffs on China, while leaving others in place as part of an "enforcement mechanism" on a US-China trade deal.

The US "enforcement mechanism" is akin to the golden band worn by the Monkey King Sun Wukong on his head in the "Journey to the West", a Chinese novel published in the 16th century during the Ming dynasty. Whenever "old Sun" misbehaved, his master Tang Sanzang would recite the "Band-tightening Spell" to cause a terrible headache for the monkey. As a result, the Monkey King would be forced to obey his master.

(b) No further tariff does not mean no trade war. The current tariffs and trade talks only serve to divert attention from the real trade war that is raging furiously on another front. That trade war is a brutal assault on Huawei, ZTE and any other Chinese high-tech companies which the US regards as potential threats to its economic dominance. The US rules out any bargain or trade talk on its worldwide campaigns to ban Chinese high-tech companies from the global markets as it believes they will all be exterminated eventually.

Using an analogy, while the inhabitants of a besieged city are distracted by the battle cries, the beating of war drums and waving of banners in front of the city gates, they are unaware that their enemies are digging a secret tunnel into the city. Any defender found in the underground passage is slaughtered mercilessly. When the besieged inhabitants finally wake up to the reality, it may be too late.

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