Tag: tariffs

Hong Kong and the Tariff war.

There they are, week after week, the residents of Hong Kong protesting the mainland’s suppression of their liberties, in violation of the agreement China signed in 1997 with England which would guarantee the territory keeping their rights for another 50 years. Week after week the protesters continue to fight, and week after week the police and armed thugs push them back.

Is the rest of the world taking a firm stand against the mainland’s repression of the protesters?

No.

The US could be summoning international support to tell China not to mistreat the protesters but it is not. And it is not because Mr Trump has not valued our alliances.

Our president may think he has achieved a great victory in getting China – through his imposition of tariffs – to drop from being our number one trading partner to becoming our third largest, behind Canada and Mexico, but that is no victory at all. Instead, what the tariffs have done is increase animosities and hurt the global economy.

As Trump has carried on with applying tariffs on China and threatening them on our allies, our stature in the world has diminished.

As Trump has carried on against immigrants, our moral standing has suffered too.

Meanwhile, with each protest, the people in Hong Kong keep sending out a call to the nations of the world to take a stand with them in the fight for freedom. We used to be able to hear those calls but gone is our moral leadership.

Can we ask China not to repress the protesters in Hong Kong when we are bashing them with tariffs? They would laugh at us.

Can we ask the rest of the world to take a stand with us? The likely answer, ‘aren’t you all about making America great again? That doesn’t include us, does it?’

The courageous people of Hong Kong will fight on because that is their precious land. They are fighting for their freedom. They are also fighting for the freedom of all Chinese, even those in the mainland whose voices are harshly suppressed.

One day China will be free, and they will do so fueled by the memories of the sacrifices of their brothers and sisters in Hong Kong.

What Mr Trump doesn’t get, is that China’s drive for becoming a great nation cannot be stopped.

Yes, they have traded unfairly and stolen technology, but they have it in them to learn from it and create their own. Didn’t they already travel to the other side of the moon without our help?

A different approach to the trade problem was available, and still is, one that includes cooperation with our allies who are also affected. But our myopic president dismissed such option. The complexities of the world dwarf him.

Had he not started a tariff war, we, and the rest of the world, could well have been in a better position to stand together in defense of Hong Kong.

And yet, still we hope, that Hong Kong doesn’t turn into another Tiananmen.

The White House is Empty.

After a short truce declared at the end of June, Trump decided to further raise tariffs in his ill-conceived plan to beat China regardless of the softening of the world economy. Last week the Federal Reserve Bank cut the interest rate in an effort to limit the damage the tariffs have been inflicting on our own economy. Then this last weekend we were struck by two back to back mass shootings, first in El Paso, Texas and then in Dayton, Ohio.

A deep malaise has seized the nation and yet, at this critical moment, we are, in effect, leaderless. There is no one in charge at the White House, no one with vision or moral courage.

The trade war with China was a bad idea from the start. There are plenty of other ways to address our differences but not at the expense of imperiling our economies. Furthermore, we will not beat China in a trade war, and we will not because they will endure more suffering than us.

But listen to one of the president’s advisers talk on the radio and one sees a common denominator: the effort to demonize. The adviser, Peter Navarro, spoke the other day as if the one objective driving China’s existence was to subjugate Americans, to get us down on our knees and beg for mercy. There was rage in the man’s voice as he spoke of Chinese soldiers devoted to hacking our systems, and of China’s massive shipments of the drug fentanyl to poison our hearts and minds. China, the devil incarnate. As if we were known for being helpless.

Not willing to back off, over the weekend China fought back against Trump’s raise in tariffs by devaluing their currency which will make their exports cheaper.

The financial markets, in turn, sensing the deep malaise, the uncertainty, the lack of perspective in the White House, the void of leadership, have responded with a sharp drop in the Dow.  

We will not win a trade war with China but a short sighted president with profound personal flaws keeps beating that drum in a vain attempt to deflect personal scrutiny. And as he does so he continues to undermine what had been an economy with steady growth.

This is the same man who rose to his position by way of inciting hate, demonizing immigrants and Muslims, and who has thus empowered those blinded by their hate.

Our president, himself filled with hate and unable or unwilling to defuse it, has by his example, given license to others who have weaker defenses against their unexamined impulses.

And so, no matter how many proclamations and tweets and executive orders come from the White House, if one takes a moment to sift through it all, it is clear that the Oval Office has been empty. There is no one there. Sure, someone goes in and out, sits at the desk and walks around, meets with foreign leaders and makes lots of noises, but there’s no one there with the brain needed to lead us. And because of it we are drifting dangerously, without a moral and intellectual compass to lead us into the future.

Don’t Humiliate China

China does not yet have the economic power that America has. And it is likely that if the trade war escalates, China will, indeed, be hurt by it, more so than we will. Of course, so will the world economy.

I doubt that China will back off if Trump follows through with his threat of imposing more tariffs, even though it appears that they are dependent on American technology companies as suppliers of component parts.

But why abuse our position of strength?

Why try to bring China to its knees?

I think it is a mistake.

There are, presently, in China, sectors that are deeply wedded to the notion of a more democratic society. They battle daily the state’s oppressive surveillance system and still they are growing.

It will take more time for these resistance sectors to eventually make their presence felt in the existing power structure, but one day they will. Any effort on our part to “beat” China economically, is likely to increase political repression and weaken their struggle.

Pushing China around economically will not last long, anyway. Eventually they will find their stride for they are resilient and strong. And when they do, then what?

Jack Ma, the head of Alibaba – the gigantic online commerce platform – is a communist party member. A multibillionaire enlisted by the Communist Party. Does that not tell us something about what is going on in China? Is that not the height of contradictions? Is that not a glaring example of a country in transition?

Mr Ma represents the Chinese state’s reliance on men and women who’ve been able to channel their creative energies and generate all manner of opportunities for the rest of the nation.

The Chinese model has transformed a nearly feudal society into a world powerhouse. But lagging well behind is the push for human rights. As dissenters have said, they not only want rice, they want rights too. And their drive will continue to grow.

Just this weekend a large mass of protesters in Hong Kong showed their opposition to a law to extradite residents to the mainland.

Mr Trump needs to look at his choices with a sense of history.

An escalation of tariffs may win him some points in the short term and satisfy some of his supporters, but in the end will amount to little more than a pyrrhic victory. So we may win the battle today but not the war tomorrow.

Oscar Valdes    oscarvaldes.net

Trump, Tariffs and the Reelection Bid.

Battle for the Nation (3)

There is no question that the tariffs Trump is imposing on China and the threat to impose them on Mexico are a burden to the American taxpayer. Both sides are hurt by them but Trump is betting that they will hurt the other side more than us. Tariffs have not yet derailed our economic expansion but they may well do so.

Are there problems with our trade with China? Of course. Do they need addressing? No doubt. But what happened to gradualism? Wouldn’t that approach give our industries and every other nation’s enough time to make the necessary adjustments?

Yes, it would.

The reason Trump is rushing headlong with tariffs is clear. He is convinced that they are his ticket to reelection. He appears to think that pushing tariffs will project him as the great American gladiator, the sublime avenger of all injuries inflicted upon us.

But we will not beat China on tariffs. They will fight back and even endure much pain rather than bow to Trump’s demands. In the 80s we could impose tariffs on Japan and stem their rise because we had defeated them in WWII. We did not defeat China. She was not even a nation.

China has become a formidable opponent. Their brand of state sponsored development, their drive and ambition, has challenged our position in the world.

Their commitment to technological superiority, their advances in 5G and artificial intelligence, all make it evident that their push for world dominance is here to stay.

Should we be frightened? It depends on how capable we perceive ourselves to be. 

China’s rise and defiance should be seen as a warning that we have to reorganize our economy and the way we connect to ourselves and to the world.

To do that we need to think clearly as to what our priorities are.

Take immigration: immigrants have contributed enormously to who we are now and what we have. A Russian immigrant is Google’s cofounder. Apple’s Steven Jobs’ father came from Syria. Intel’s Andy Grove, a leading figure in the company’s growth, came from Hungary.

Present day Silicon Valley is filled with first or second generation Indian entrepreneurs.

I live in California. There are several buildings going up near where I live. The major component to the labor force pushing up those structures are Latinos.

When I go for medical care the likelihood is high that the nurse or doctor assisting me will be a first or second generation immigrant. And so too when I go to the pharmacy to pick up my meds.

Same at the bank or when I go for coffee or to get something to eat.

We are immigrants. That’s who we are. We have needed the numbers and immigrants have provided them.

China’s story is different. They have the numbers. But they started to thrive quickly only when they opened to the world. It was that influx of ideas and technologies that, coupled with their drive and ingenuity, lifted them to their present status.

Again, openness.

In China’s case, however, selective openness. They have not been willing to import democratic ideals and so their population remains severely bereft of individual liberties.

The West bet that trade with China would inevitably stir a strong desire from within to transform their communist ideology. It hasn’t happened but it does not mean that it will not.

We got wrong the time table for political change but the central concept remains. Sooner or later China will open up politically.

Trump’s intemperate push for tariffs betrays a sense of panic.

China announces their desire for being the worldwide leader in technology and Trump frets that we will be at their mercy.

He bangs his tariff drum – the louder the better – thinking that it will deter China.

It will not.

The Chinese must love that our president is showing so little confidence in all the pain and effort that it has taken to build America. But Trump has little sense of history.

Our concept of liberty is the distillation of hundreds of years of thought and discussion, struggles and wars.

China has not done that work. They went from a near feudal economy to world prominence in a very short time. Much like South Korea did, except that we could exert political influence there because we fought for their freedom.  

Why then are we panicking with China’s rise?

There is no need to do so. In fact, it is counterproductive.

To panic is to doubt that our model of governance is effective.

It is effective not only because of our economic and military strength but because it keeps attracting millions of people from all over the world. And yet, it needs to be fairer.

As we embrace greater fairness we will help release the fullness of our citizens’ productive capacities.

Rather than panic with China’s rise, we should welcome it, for it challenges us to remake our society.

Let us not forget that our society is not in its final form. Far from it. It is designed to be in a continuous state of flux because the complexity of life demands it.

China’s spectacular growth has contributed to the rise of nationalism both here and abroad. But reacting in such way is going in the wrong direction. We must not lose faith in man’s thirst for freedom and how it unleashes their creative forces.

China lags way behind the West in allowing the fundamental freedom that man has long aspired to. In time, and with visionary leadership, they will come around.

Immigration needs reform in that the nation must have control of its borders. Let’s tackle that. Let’s discuss it. Let’s do a referendum on the issue.

But let us not allow a leader without a sense of history, to throw us into a state of panic that leads us to question the fundamental values that we have struggled so hard to maintain.

Oscar Valdes  oscarvaldes.net