Faced With Stagnant Domestic Growth, China Starts A New Global Trade War | ZeroHedge

By Mish Shedlock

China is going all in on exports to revive growth led by EVs. Trump vows to strike back with 60% tariffs.

Accelerated Global Trade War

The Wall Street Journal comments China Is Starting a New Trade War.

Two Guiding Principles

China’s first fear is well founded in reality. US sanctions on chips and AI technology have forced China to go it alone. It’s a US mistake to think it can cut off China from leading technology.

Should the US succeed, China would and could cut the supply or rare earth minerals the US needs to make phones, missile guidance systems, EVs, wind turbines, and advanced chips.

What About Dumping?

China is on track to make around 750 gigawatts of solar cells this year, despite only needing 220 gigawatts domestically in 2023.

But the US grows more corn and soybeans than it can eat.

If every country produced only what it could consume, global trade would be zero.

China has access to minerals needed to make solar panels and batteries for EVs. To meet energy goals, the US should be thrilled to get cheap solar panels.

But to save a few hundred jobs (that vanished anyway), Biden upped tariffs and mandated installers use US-made panels.

Another Green Energy Company Declares Bankruptcy

On August 10, I commented Another Green Energy Company Declares Bankruptcy, Thank Biden’s Tariffs

No only did production vanish so did installation jobs.

Eh Tu Canada?

Reuters reports Canada to Impose 100% Tariff on Chinese EVs, Including Teslas

Undaunted, China is accelerating production of EVs.

Ford Cancels Plans for Electric SUV, Expects a $1.9 Billion Loss

Please note Ford Cancels Plans for Electric SUV, Expects a $1.9 Billion Loss

J.D. Vance’s Knockoff Theory of Manufacturing

The Wall Street Journal author Allysia Finley comments on J.D. Vance’s Knockoff Theory of Manufacturing

Someone gets it. Thank you Allysia Finley.

Massive Failure of Sanctions

On September 4, 2023, I noted US Sanctions Fail Again, China Now Produces Its Own Advanced Computer Chips

China is far behind the US in chip technology. However, it is doing much better than the US expected.

China is producing some chips that the US dis not want China to have at all.

February 19, 2024: US Impounds Thousands of German Vehicles Over One Tiny Part Made in China

The US Blacklisted Xiaomi

On May 21, 2024 I commented  The US Blacklisted Xiaomi Three Years Ago Now it Makes EVs

The US forced Xiaomi into a new sector after the U.S. government blacklisted it in January 2021 for what it said were ties to China’s military.

Attempt to Prohibit China’s Access to AI

On August 26, I commented China Gains Secret Access to Nvdia Microchips by Renting Computers

Reason for the US failure goes back to my September 19, 2023: Lesson of the Day: Sanctions Don’t Work Because They Create New Markets

Critical Materials Risk Assessment by the US Department of Energy

Please consider a Critical Materials Risk Assessment by the US Department of Energy

The US Department of Energy has placed some of the rare earth minerals we need for weapons systems, windmills, batteries, and aircraft on a critical materials list.

Nearly all of them are mined or refined in China. Yet Biden just blocked production in the US.

Shades of Smoot Hawley and Global War Threats

Trump has threatened to escalate a global trade war against not just China, but the whole world with a 60 percent tariff on China and 10 percent on everyone else. He believes tariffs can replace the income tax.

It would be the biggest trade war since the 1930 Smoot-Hawley Tariff Act worsened the Great Depression. China could respond by cutting off US access to rare earth minerals. The word is on a collision course with China no matter who wins in November.

When trade ends, wars start.

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