JayMac: Consumers lose in trade war with China
DISCLAIMER: the following is an opinion piece and does not necessarily reflect the views of KSL Newsradio or its ownership.
I looked at my stock portfolio recently and it was all red. I lost a lot of money. Aghhh! Why? Well, it looks like the U.S. is now in a trade war with China.
The Trump administration raised tariffs 25% on $200 billion worth of Chinese goods. And guess what? China retaliated by raising tariffs almost $60 billion on 5,200 U.S. products, starting June 1, including beer, wine, swimsuits, shirts, and liquefied natural gas.
The Dow has fallen more than 617 points or 2.38.% The S&P fell almost 5%. Both are off to their worst start for the month of May since 1970.
The U.S. imported $539 billion in goods from China in 2018. The U.S. exported $120 billion in goods to China in 2018.
Trump is being disingenuous when he says Americans won’t pay a price for his trade war.
White House economic adviser Larry Kudlow acknowledged that the Chinese do not directly pay tariffs on goods coming into the U.S., contradicting Trump’s claims that China will pay for tariffs imposed by the U.S. He went on to say that both sides will suffer, but that China will suffer more because their export markets will be taking a pounding whereas the U.S. will suffer less because the American economy is “in terrific shape.”
U.S. farmers are going to be hurt. Trump said that his administration was planning to provide about $15 billion in aid to help U.S. farmers whose products may be targeted with tariffs by China.
Trump is right about China
I know a lot of you are expecting me to bash Trump on this. But Trump is not wrong in trying to address this issue. We have been the whipping boy for China for a long time. China is not our friend. They are an abusive partner when it comes to trade. They ignore patents and copyrights. They engage in industrial espionage. Trump is right when he says we’ve been taken advantage of. He’s right to point this out and try to fix it. But is this the right time to do it?
Has the president come up with the right solution to this problem? Is a trade war the answer? And this trade war started just like that, from zero to 100. Feels like we jumped the gun.
I don’t rely on the stock market for my living. When it goes down I don’t sweat it that much because I know the market will go back up, but there are people out there who rely on their investments and take a huge hit when the markets fall.
Which country is going to outwit, outlast and outplay the other? I feel China is going to be able to outlast the U.S. Why? Because China’s economy and its government are different from the U.S. What will you do when the tariffs start to affect you?
Can America weather the economic storm?
China has a militarized government. Their economy can take a dive, and there’s nothing the people can do about it. Can the United States suffer short-term pain for the long-term gain? China is adding a tax on imported products Americans buy every day. Will Americans keep on buying? If they can’t afford it anymore, China’s economy takes a hit. Consumers and the economies on both sides will pay for this trade war. But which side outlasts the other? Who survives the longest? I think China does. I don’t think it would take that much for U.S. consumers to hold off on spending and wait and see how this trade war turns out.
It’s been reported that Trump lost $1.17 billion from 1985 to 1994. But what if he had made twice as much money in the following decades? Sometimes you have to experience loss in order to achieve gains. What if he was a master negotiator? Does that make him a master negotiator with China? No, not even close. The pressures in a business deal versus a political deal are completely different. The person who could actually suffer the most is Trump. He’s putting his re-election and his economy at risk. He could have left China alone and the economy could keep on roaring. No one would criticize him for China. This has been going on long before Trump was elected. This tells me he’s willing to take the political hit or thinks there won’t be one because his supporters will back him no matter what.
This president does things because of his ego. But not this time. He’s has talked about this issue with China for years; it’s a core philosophy for him. I think it’s something he really believes in.
Jay Mcfarland hosts the JayMac News Show, weekdays from 12:30 to 3 p.m. on KSL Newsradio, as well as the fictional podcast, Hosts of Eden. KSL Newsradio is part of Bonneville Media and based in Salt Lake City, Utah.
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