While the markets are panicking, the geopolitical situation is ramping up. It is going to be interesting to see what the responses are going to be to the tariffs and how far Trump is willing to go. Will he really push another 50 points onto China? Will China match it again? For those counting though, The US imports about twice as much from China, than China does from the US, and China accounts for over 30% of all production on earth.
What happens if they just stop shipping to the US?
Or what happens if instead of an import tariff, the RoW imposes export tariffs on the US, "saying sure, you can buy from us, but we are going to up the price of everything going to the US". What if they take that difference and use it to subsidise the cost for other countries instead, creating additional buying power and a situation where demand in the RoW can increase. While the US market is the world largest and is mammoth, I wonder how much it would take to increase the consumer markets of the RoW to soak up the loss of trade?
How much are Americans willing to pay for an iPhone?
What about those oh so popular Ford F-150s that are as American as Apple pie and the top seller in the States? Well - 45% American... Well, if you count Canada as part of America.... That's right, only 45% of an F-150 is American sourced, and that doesn't differentiate for what is coming from Canada, even though it is assembled locally. And that is about the highest percentage for all the cars out there.
What about all the other stuff besides cars?
The US is a massive country with a lot of resources, and it would be able to be self-sufficient without international trade... but is that the America that people really want?
My ex's family live in a small town but when their daughters both moved to the city (where I live), they started visiting. One day, I picked up some Chinese takeaway for dinner and from then on, every time they visited, they wanted more. I introduced my ex to sushi, and curry, and tacos and a whole range of things and her world of flavour changed - would she want to go back to eating only traditional Finnish foods?
Nobody would.....
But what about all the other aspects of global culture that Americans have come to expect, are they willing to do without? For instance, Americans like a cup of coffee - but other than a bit in Hawaii, don't grow any of it. Maybe it would be a good thing to ween people off the coffee - after all, they can get their caffeine hit from those energy drinks. Except, the caffeine in those drinks is synthetically produced in factories.... In China.
All of the imported products might be able to be produced eventually in the US, but if the RoW were to just stop selling to the US, what would happen in the meantime? How long does it take to get the US functioning smoothly, if nothing is coming in from abroad?
While I don't think the other countries have the balls, if they really wanted to break this flex by the US by using tariffs, and if they really wanted to create turmoil in the US like they haven't seen before, then the RoW would just stop trading and ostracise the US from the global economy. And maybe as the RoW increases their consumer behaviours, and the US is forced to reduce theirs, the land of opportunity might not be so opportune, and people might start leaving, rather than trying to get in - setting up a brain drain.
Currently, there are relatively large groups of people protesting the current government actions, and one thing that I have found interesting just by looking at the pictures, is that it isn't the young hippies who are doing it because it is cool - there seems to be a lot of older people in the crowds as well. Does this indicate anything for the future of the protests? Is the stomach there for consumer hardship?
What the RoW has to remember is all of this is an attempt to "Make America Great Again", not the world a better place. Of course, it is unclear exactly what period Great America it will be - perhaps when it was a British colony? My point is, that the RoW has an opportunity to rebalance the power structures and maybe improve wealth distribution, if it doesn't bow down and play the short game of keeping the US market alive. The problem is, the power structures in the other countries are supported by the status quo too, and they don't want to give up their control over the people either.
In a couple days the EU will announce the countermeasures from the bloc, and I suspect they are going to be pretty lame. All people seem to see is the current situation, rather than a situation where things are better than today. And the normal people who are supporting the US oligarchy, I feel are in for a nasty surprise if this economic plan succeeds, because the average person doesn't factor in. They talk about bringing jobs back to America, but those same people are the ones who are automating jobs away from humans, and finding as many ways to maximise profit, without increasing headcount. The corporations will be wealthy, the GDP might be brilliant - and still the average person will be in a worse position.
Practicality doesn't matter.
People are supporting their position based on their emotional state, driven by what is often far from accurate belief models about how the world works. Right and left are fighting about the irrelevant, while the things that actually matter fly under the radar. Real people are suffering and more will suffer, while those with private planes and yachts manipulate the conditions to get a little more for themselves. And that mentality will always want more, and more, and more - and it will take your job too, if it makes them more.
If the RoW coordinates and cooperates, it will win a trade war with the US easily.
The cost will be World War III.
Taraz
[ Gen1: Hive ]