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US and China slash tariffs as trade war cools
It looks like we will experience a de-escalation of the tariff battle between the US and China.
How does this line up with your personal predictions for how this was going to proceed?
My belief was that both sides would maintain 100+% tariffs but exempt essentially everything that matters. This development shows that I was wrong and I don't understand something about the events that have occurred. Does anybody have any ideas on what I missed?
To establish ground truth facts: All that is left of Liberation Day tariffs on China is minimal 10% “against humanity” tariff, reciprocated by 10% as well. 20% of “Fentanyl tariff” (lol) came in February, and China reciprocated it with asymmetric tariffs which are also in power. So it's somewhat more equal than 10% for 30%. Also, China has not repealed their global export controls on rare earth elements which is in fact terrible as there is no way to quickly ramp up production elsewhere, stockpiles will run out in months, and much of the imagined American revival (eg industrial automation, so robots) requires REEs. Though there's cope.
Chinese imports of ≈$500B add far more to American GDP, maybe on the order of $2T even naively accounted (eg not considering the costs of unmaintained infra if trade were terminated) – they're a large chunk of all consumed goods and inputs to almost all industry, they retail for much higher value, and create a lot of economic activity. Since the gap with the rest of the world is just 20%, China refuses to cover the tariffs on their side and there is, in fact, no ready substitute to most of their products at acceptable volume and shortages would have caused crisis and panic, most businesses opt to pass the price to consumer or just cut margins. So the main effect of this in the short term will be slight reduction in bilateral trade, slightly (because the markup of US distributors is insane) higher prices of everything for Americans, and redistribution of wealth from businesses and consumers towards their state.
I've been wrong with my usual doomerism, predicting that neither side will fold. I mainly overrated Trump's ego strength and isolation from feedback. China kept playing this with surgical game-theoretical precision, consistently demanding respectful and equal treatment and insisting that they will not be intimidated but in principle oppose trade wars as lose-lose scenarios. Trump toadies initially made some smug noises about “isolating the bad actor”; then, when Chinese retaliation succeeded in preventing quick submission of others, particularly emboldening other largest trade partners (EU and Japan), improved ties with ASEAN, and precluded any such isolation – course-corrected, through some opaque drama between courtiers it seems. They started begging for talks (in a bizarre Oriental manner of requesting that Xi calls first, to save Trump face, maintaining the optics of “they need us and our Great American Consumer more than we need their cheap trinkets”), and eventually signaled willingness for equal deescalation that the Chinese side has been expecting. We are here.
What has been learned? First, that indeed, the US just does not have the cards to push China around, much less rally “the world” against it. That trust and respect is easily lost. That even nations highly dependent on the US security umbrella and on trade with the US can refuse to bow, and barter for their own interests:
That the South-East Asia is probably not a viable platform for any “choking” or “Malacca blockade”, like, just look at this statement.
That the EU has sovereignty, that Canada has sovereignty, that… basically, that the US is not a big scary hegemonic superpower it imagines itself to be and sometimes laments the wages of being. It's just a very powerful country, with large but decidedly finite leverage, and that runs well short of getting everyone to play along with American King's unreasonable imagination. The US can not credibly maintain the pressure on a determined adversary the size of China. Now, some half-dead vassals like the UK will make unequal concessions. But that's about it. Others will drive a bargain.
It's been a moderate economic shock for everyone, and a significant loss of credibility for the US.
We still have deminimis unavailable for China, which is a problem for individual consumers. It's basically impossible to buy anything from China now.
Well, it'll be more costly, but it'll be possible.
Things move quickly. I think fentanyl stuff will also get resolved.
$100 for postal packages.
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I never feel like I learn something from your comments anymore. Its always just AI/China is the best, unbeatable, even better than you thought, and not even committing to anything concrete there. Like for example:
In what sense wasnt this already demonstrated by Germany buying russian gas? That seems like a case where wed expect more US influence than any of this tariff debacle.
From my point of view it's that you have degenerated into kanging and chimping from cognitive dissonance, like unfortunately many in the American sphere of influence. It seems Americans simply cannot conceive of having a serious or superior enemy, they grew addicted to safely dunking on premodern peoples in slippers or nations with deep structural disadvantages like Soviets with their planned economy and resource-poor, occupied Japan with 1/3 of their population – even as they sometimes smirk and play the underdog in their ridiculous doomposting. They feel like Main Characters of history, who are destined to win for narrative reasons and therefore can afford arbitrary foolishness in the midgame – at it will amount to is a few extra lines in the moral takeaway in the epilogue. Karl Rove's famous quote is quite apt.
China is not unbeatable, China is not stronger than the (hypothetical at this point) US-aligned alliance of democracies, and they're currently behind in AI. But you cannot see when I say this, because it would legitimate my positions that are less soothing for your ego, and instead you are compelled to default to these whiny complaints that are just a demand to shut up. Were you living in reality, you'd feel more incensed at nonsensical, low-IQ-racist boomer copes that keep undermining your side's negotiating position.
Accordingly I gloat that much harder when you lot suffer setbacks, because I strongly despise delusion and unearned smugness and believe they ought to be punished.
It's a matter of degree. Pressing Germany to move away from Russian energy supply could be easily justified in the world where the US was a credible guarantor of German security, as indeed Russia tried the gas card to dissuade Germany from supporting Ukraine, and now German industry which grew dependent on Russian gas is contracting. True, Germany showed independent (and faulty) decisionmaking then. But this was all in the realm of politics as usual, rules-based international order, and German choice was business as usual too. Now we see a test of naked American authority in Trump's exploitative trade war, in “DO NOT RETALIATE AND YOU WILL BE REWARDED” bullshit. Faceh explicitly says “Honestly I can say I thought there'd be more capitulation by now”, and that's exactly the spirit. This is not normal politics, this is a desperate shit test: will you cave, or will you resist? Are you a country or an imperial vassal? Getting refusals in this condition is decisive, and clearly the US side expected to get fewer of them.
I have doubts about this. Much of that 'alliance of democracies' is EU and EU is an utterly hopeless project which would require a STEM-pilled / bureaucracy hating Stalin purging tens of thousands of people with extreme prejudice.
Chinese don't seem to be mired in bureaucracy and can 'just build things'.
Eugyppius recently noted a bridge that crashed in Dresden is not expected to be replaced until 2035! One fucking bridge over a shallow river, the kind that an engineering unit would build in 2 days! 2035! So when half or third of your 'strength' is in this kind of state, you have problems.
I'm not sure if you're familiar with US infrastructure issues, but it's not pretty either with e.g. Golden Gate bridge, where the new 'suicide nets' installed (400 million) cost a substantial fraction of the inflation adjusted cost of the entire bridge (supposedly 700 million $).
I agree with this. Europe is extremely sclerotic and mostly coasting on past developments and the contributions of rare reformers that actually patch out some of the excesses of our buerocracies, of which we have multiple layers all of which have an unquestioned mandate to grow unchecked by anything other than hard financial limits, and all of which promote a progressive vision of prosperous society as a thing that just works by default and can be taken for granted.
And nevermind defence; Europe is by and large a joke when it comes to military anything. Some countries more
some less
but none of them likely to be able to put up a real fight against a peer or above-peer military power because Europe isn't a nation, or even a federation of nations, but simply an economic zone of economic zones, yadda yadda lack of social cohesion, I'm out of time, you know the drill.
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I expect you'll dismiss what I say as just another smug American chauvinist...but watching you express with great confidence that the geniuses at the US state department were about to crush the Chinese upstarts a few years ago, to joining the ranks of the resident Chinamaxxers should be enough to give anyone whiplash. If anything, it should make readers update their priors about trusting anyone with grand geopolitical narratives.
The US State department isn't staffed by geniuses who can shape the world to their liking. Nor is the CCP. And even if you took US IMO team and forced them to study geopolitics rather than
theoretical physicistsfinance, their ability to influence the world would be minimal. The NWO-deep state-Masonic brotherhood conspiracy theorists believe manipulate world events to their benefit doesn't exist, simply because the world is too hideously complex a system for someone of any intellect or means to meaningfully manipulate. I don't seriously believe that anyone can predict what will happen or who the paper tiger is.Is China an unstoppable manufacturing behemoth about to steamroll the US navy on their way to Taiwan, or an aging and shrinking nation who imploded their property sector with loads of debt? Is America the global hegemon with the best military, largest concentration of talent and strongest economy in the world, or a sclerotic, internally-divided shitshow? Probably...all of the above? Who can say whether China's population bomb represents a hard cap to their ascension, or whether they can dominate every STEM and manufacturing field to a degree that dwarfs the rest of the world before they lose their dynamism? Or whether China does a Pearl Harbor next October and Americans of all stripes rally around the flag, erasing the problem of partisanship?
The uncertainty is part of the fun, I suppose. But I'm fairly confident that nobody can make meaningful predictions about what will happen consistently. And I'm certain that whatever happens, some asshole on TheMotte will write a novella about how fucking stupid Trump/Xi Jinping were for doing X when any retard could see that Y was the obvious course of action. Hindsight bias is a helluva drug.
All of these criticisms can be leveled at the Chinese as well - you've never heard them rant about 5,000 years of civilization? The century of humiliation making them temporarily embarrassed hegemons, from which they will inevitably recover? And you think that a world where China is hegemon won't see shit like Trump's exploitative trade war on the regular? Look at how they act in the SCS, or fish the hell out of South American countries EEZ. Look at where the Thomas and Sabina shoals are on a map and tell me what business they have ramming Filipino ships. Look at the wolf warrior diplomacy bullshit they pulled before realizing how ugly pulling back the veil made them look. Now scale that up to hegemon-level.
Not to mention I'm fairly confident I've seen you mock Americans hyping the 'Chinese threat' and making them out to be more competent than they actually are as a motivation for more defense spending.
I've burned plenty of incense. It hasn't gotten me anywhere, and I've seen how miserable the people are who walk far enough down that path. Boomers gonna boom boom boom my friend.
I think the US Deep State was capable of winning this, just like Russia was capable of winning in Ukraine, in theory, if we were to ignore the actual level of Russian governance and corruption and ability to prosecute the war rationally. I knew of that one and so didn't expect Russia to win, and overestimated the US mainly because I did not account for the immense capacity for self-sabotage.
I think they have enough talented people to do this, it's just those people have lost in internal politics.
Manipulating the world is made much easier when you own major causal factors of that world. It doesn't take 200 IQ, though intelligence helps not to manipulate yourself into the ditch. All of great power politics is such manipulation. Suppressing competitors, strengthening allies, capturing international institutions, and yes, it's done by networks of high-agency people, not by vague sentiment of the electorate. Sorry, that's just what we can observe happening.
Nothing is set in stone; despite triumphalist propaganda directed at the public, I think the USG is aware of the problems by now and still has major cards like monopoly in crucial technology (ASML is a de facto American company), global reserve currency and, most of all, global goodwill, everyone anxious to go back to normal. Trump has improved his standing in the Middle East with a single speech. Americans are losing time but they can undo the self-inflicted damage with a few more such pivots, apologize for tone-deaf Greenland-posting, revitalize their alliance networks, actually reindustrialize, implement very liberal issuance of citizenship to all Chinese talent and brain-drain the nation – and that's not all. Maybe the AGI God plan will work out too – after all, the attack on Huawei and broader semiconductor supply chain was a resounding success of the sort I expected, it did delay China by years. Maybe Starship makes Brillant Pebbles a reality and forces China to disarm and sign unequal treaties… The US Hegemony is very much a viable project, except some Americans are in the way.
I recognize that my median prognosis has changed in a way that seems discrediting, but it's basically down to high-noise human factors on the US side.
They do have a strong belief in their civilizational superiority, and this chauvinism and smugness is another reason I was bearish on them. But in assessment of their current relative position they tend to be humble. “Building a world-class navy by 2035” is a typical Chinese goal. “Becoming a moderately prosperous society by 2020”. In 2018, Xi said:
This does not look as hubristic as American Main Character Syndrome to me.
China has never held more than tenuous regional hegemony, I think this framing is not reflective of their ambitions and self-perception.
Yes. It's a stupid trade war and it's highly likely that no Tsinghua graduate will be so stupid. That aside, China has an official policy of not pursuing global hegemony. This certainly has no teeth, but Americans don't even have an equivalent toothless commitment.
I've been right about that, Americans do hype up the Chinese military threat excessively, and they don't even build military that'd be useful in countering that threat, it's nearly entirely a grift. $1 trillion will go to more nebulous next-generation prototypes and battling the tyranny of distance in distant bases, not to a buildup of autonomous platforms that can compete in the SCS. Again, assuming Americans keep self-sabotaging.
I'll wager that if we're still here in 3-5 years, you'll be saying the same thing about underestimating the Chinese capacity for self-sabotage. The United States isn't going to collapse in the next 5-10 year timeframe, and if we lose to China, it will be a long and drawn-out process. Not some knockout punch engineered by whatever the CCP department of foreign affairs is called.
Did those talented people lose in the 2000s during the GWOT era? Or in the 90s when we let American companies migrate to China en masse? When have these Mycroftian prodigies ever won in internal politics, what decisions did they make with said influence and where's the golden era in American foreign and domestic policy mediated by these people?
Like what, the financial system that proved utterly incapable of regime change in Iran or hindering Russia's ability to wage war? Toothless institutions like the UN, WHO or WTO?
Sure, the electorate isn't writing policy, nor should they.
That being said, the ability of anyone to influence systems this complex is limited, and related to how well we actually understand them. We designed computers from the ground up, and you can drill all the way down to machine code and circuit diagrams if you like. Mastery over the system makes you a 10x software engineer, or whatever the 10x hardware engineer is called. Diagnosing and fixing problems in a car or aircraft is eminently doable because we designed and understand all the parts ourselves.
On the other hand, reading all the economics textbooks in the world won't give you mastery over the stock market any more than learning fluid dynamics will help you understand the weather well enough to predict it perfectly. Biology PhDs can't even make basic predictions about how the system they've studied their entire career will behave in response to a given perturbation. And this is only partially due to the fact that they aren't very bright or talented in general, but more due to how complex and inscrutable biology is - at least to humans as we are now.
You bring up Russia and Ukraine - in March 2022, was there anyone (including what we can guess the US state department thought at the time!) who confidently predicted the outcome would be >= 3 year grinding war with little movement on the front, dominated by drone warfare? I saw plenty of takes that Russia was about to curbstomp Ukraine, then after the initial offensive failed, plenty of takes that Russia was about to collapse due to American sanctions, all of which turned out to be bullshit. If you can't predict that, I don't believe you when you say that Russia was capable of winning the war if they had just done it rationally, or that you or anyone could have figured out what to do differently in the leadup to reach a significantly different outcome. The outcome hinged on decisions made by thousands, if not millions of people - their morale, equipment, education, talent, weather, luck. If some South African entrepreneur had listened to all the people telling him not to build a rocket company, and the Ukrainian military never had access to starlink, would we be looking at a vastly different map? If Obama had pushed NATO to seriously stockpile arms and could provide Ukraine the materiel (shells, tanks, drones, whatever) to prosecute the war properly, ditto?
I hope we don't see the future that proves you wrong. If Americans were truly hegemonic and held that as their goal, the world would look very different.
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"You" as in me, or the forum? Because I agreed with the conclusion here. In general I dont necessarily mean that youre wrong about this stuff, more that a) its very predictable what direction youll go and b) you dont give a lot besides that direction. I agree that what I remember from you about the chinese-AI overlap was better. I did exaggerate.
I do in fact have some stock on pre-boomer-racism that is more or less that. But part of that is that its not the "midgame" because I dont think the game ends, either as a whole or for whites specifically. Which might be related to AI scepticism. It doesnt impact medium-term prediction that much.
I see what you mean. I can just say thats not how people here in europe think of it, and that in itself should influence how we read the reaction.
I dont want you to shut up. Ideally Id want you to start posting about other topics as well again, since these two arent really my focus, but if these post were more substantial in relation to the gloating, that would be an improvement as well.
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The miscalculation was not only that Trump actually believed in tariffs, unlike abortion, immigration, trans whatever, where he was always malleable. It was that Trump’s career record displayed regular, bone headed conviction to make and stand by dumb decisions (which is why the business declared bankruptcy multiple times during the largest multi-decade property boom in history) principally around the casinos in Atlantic City. It’s relevant because that whole project (directly responsible for 3 out of 4 of his bankruptcies) was the result not only of great ambition but also of steadfastness in the face of many advisors, bankers, fellow developers, partners etc no doubt telling him he was making the wrong decision(s).
On this basis I assumed that while Trump would fold eventually on the tariffs, he would persevere until the economic situation deteriorated considerably. When thinking about why he caved before then, I have a few ideas. The first is that Trump thinks of himself as a genius, especially in real estate, but he does allow for the existence of other geniuses, and I think he does accept that at least in domain terms other people are smarter than him (Elon Musk with ‘computer’, Jamie Dimon in finance etc), and they were both against tariffs. The second is that he’s easily persuaded by flattery, which is a classic Chinese art form, and while Xi was publicly posturing I do think there has been some suggestion that the diplomatic approach was softer. Lastly, I think people Trump likes personally like MBS and Meloni who both deal a lot with the Chinese and are in many ways economically reliant on them told him the tariffs were bad, and Trump has something of a sense of loyalty, at least in certain situations, provided someone (eg Cohen) doesn’t cross him publicly.
You know, there was an episode of the Apprentice where he explained exactly how this worked. The companies which held the real estate never declared bankruptcy.
It wasn’t a genius move and he came unnecessarily close to actual ruin on a couple of occasions. You can disagree, but this one of very few areas where I personally know a couple of people involved in lending for commercial real estate in NYC and NJ at that time and they both say the same thing. (And one of them definitely voted for him, the other I would guess did).
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So... Trump blinked? These are the tariff numbers we would have if Trump had just imposed the flat 10% rate on China he did on every other country. What benefit did the United States get out of this pause on trade with China? I guess Trump and his inner circle probably made a killing on insider trading this announcement.
He got to 30 and people are calling it a good thing. If he started at this number people would shriek at it. If de minimis nuking is still there in the background overshadowed by all the other stuff, then he also got to kill shein and temu and aliexpress
30% is nothing; reshoring manufacturing when China has better logistics, transport, infrastructure, training and labor would require much more than 30%.
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Even at 30% children's pyjama's from Aliexpress are still better than what's on offer domesticly with all the US safetyism.
You mean you don't want flame retardants for children's sleep clothes? You think you can just clothe your child in loose fitting, non-retarded cotton? What if your child falls asleep while smoking and the cigarette lights their jammies and they just get fucking immolated? Has that thought crossed your mind?
Nicotine is a stimulant and prudent parents make sure that, like caffeine, it is confined to the morning and well away from nap time.
But what about their early morning puff while they’re still in their onesies?
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My kids where their silk smoking jackets over their loose fitting non-retarded cotton sleepwear while smoking.
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Giving myself credit for calling this one, although we can quibble over exact timing. I tried to keep my head down a bit until the outcome could truly be called.
Quoth me:
(I solemnly swear I didn't edit anything material in this post to make my prediction look better)
and
I think my May 2nd deadline was also met, since China was technically the ONLY holdout that still had massive Tariffs on it at that point.
And then there's this bit from the OP article:
Remember what I said up there: "and markets will 'correct course.'
I'm sure there will be other disruptions, but someone can probably run some numbers and tell me if this recovery basically makes all the turmoil of early April a wash in terms of broad economic impact (on the markets, that is). WHICH IS TO SAY, if all the doomsaying and gnashing of teeth at the time was... premature and melodramatic.
I continue to think my Model of Trump is far better at predicting his actions than virtually any pundit out there, and he's far more of a rational actor than even people here credit him. Yes, I'll accept the argument that Trump backed down faster because he was afraid of really breaking something, but the whole argument is over whether the U.S. will find itself in a stronger position after all this is done. I see this as evidence that yes, the U.S. will be able to reduce global 'paper' barriers to trade, and other countries may be handing over some tribute to the U.S. to keep in its good graces for the next few years.
The one thing I admit surprise over is that there's been relatively few deals regarding the purchase of U.S. goods OR offers to sell foreign resources. The U.K. is apparently going to buy U.S. Beef, and the Ukraine Mineral Deal is signed, and I guess there's some additional deals with Vietnam. Honestly I can say I thought there'd be more capitulation by now, but now there's a new deadline in place.
So maybe Trump hasn't brought home the bacon just yet.
To add on to my prediction, I'll say I expect that the 'final' deals being worked on during the pause will start getting executed BEFORE the one month countdown mark hits, that is we should start seeing them in the next 60 days.
I do expect more hard agreements for purchases of resources and goods, and I ALSO expect some legislation might follow that is designed to bolster U.S. manufacturing for military purposes (i.e. aimed at onshoring factories that can produce tanks, ammunition, planes, and ESPECIALLY boats).
As we get a bit closer to the deadline, I might take a stab at guessing which countries might try calling his bluff and letting the timer run out. I'm not so blind as to expect everything to go completely smoothly. I wouldn't have called the India-Pakistan kerfuffle starting up for example.
In this scenario, if the US imposes tariffs, the target country retaliates, and then after some negotiation they settle on a rate that is higher than the prior status quo but lower than the initial tariff imposition, is that a win or a loss?
This really shouldn't be surprising.
Definitely a win in my books.
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That first link goes to the 2nd page of your most recent posts. Is that what you intended? It will mean that if the post you wanted users to look at was there, it won't be there later as you make more posts.
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I expect Canada to call the bluff; I also expect this one to, uniquely, be a bit less of a bluff than it is for everyone else. I think a lot of the onshoring is, or could be reasonably expected to, come from factories and personnel in Ontario- it might legitimately be easier for the US to increase the size of the US and onshore manufacturing that way. Fortunately for him, the people who are working in those factories just lost an election to a bunch of welfare queens (and the losers know it); all Trump need do now is stay the course and have the Premiers sue for peace on their own terms.
The problem is just that the negotiations are, unusually, public; everyone else just has to wait (and get their panties in a twist, and complain on the Internet). It's only been 4 months.
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Britain and the EU won't buy beef from hormone-fed cattle. The way they talk about it, this probably won't change.
As discussed previously this is a nothingburger, but if it makes Trump happy, good job Zelensky.
Sounds like they may align with RFK Jr.'s stance. It'd be interesting if that creates enough of a market for hormone-free cattle that it shifts U.S. production as a whole.
I don't have any specific insight as to intentions there, but I assume markets will respond to shifted incentives like that.
I'm pretty sure the main goal of that particular provision is to give the U.S. a "stake" in Ukrainian independence that falls short of bringing them into NATO, but justifies them having some kind of presence in country to act as a deterrent.
Like holy cow, your own article points out:
So if the U.S. has an official agreement granting an interest in those deposits, even if its not mineable now, its a decent deterrent to future Russian incursions into the border areas that Russia would have to cross through to drive into Ukraine. It gives a future U.S. president some basic cover to drop some troops or similar in, if needed.
The U.S. keeps finding deposits of rare earth elements and other resources within its own territory (whether they can be extracted economically is a different question).
There is no SOLID reason the U.S. should have any stake in the security of Ukraine, but contriving one that's enough to give plausible cover for future actions is helpful towards leveraging a peace agreement.
This is what I'm trying to get across, if you assume Trump is JUST trying to secure the first order goal, getting more minerals for the U.S., rather than using that as leverage to work towards a lasting peace agreement, you're severely underestimating the man. Hell, he's apparently gotten Ukraine actually paying for U.S. weapons now. A second step seems to be using American companies to rebuild Ukraine, but I'll go on record saying that rebuilding probably won't solve their their population nosedive so in the longer term it'll be a bit pointless.
So Trump and Vance whine for the past year about how sending over weapons is too expensive and we need to stop, but 4 'slightly bigger' mineral deposits of questionable economic value will serve as a casus belli for dropping in American soldiers?
Isn't Ukraine mega bankrupt? They'll be effectively paying America with America's own aid.
The “mineral deal” is basically just a shuck that allows Trump to give Ukraine security guarantees in a way that he can plausibly sell to his own base. Zelensky was too much of an obstinate fool to see that and had to be dragged kicking and screaming all the way to getting what he wanted.
Not to his own base. To Putin. The idea of the deal actually extends back to the late Biden administration.
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What security guarantees did Trump give to Ukraine through the mineral deal? Under what circumstances will Trump send troops to Ukraine?
Basically it means that if the war freezes and then the Russians try to invade again five or ten years from now, whoever is President would have American economic interests and American technical workers in the area that he could (but is not required to) use as an excuse to intervene in the conflict.
So there were no guarantees. Zelensky was an obstinate fool for not wanting to give up 50% of all future sources of Ukrainian natural resource revenues for a chance that a future US president in 5-10 years will have an excuse to intervene on their behalf?
For what it's worth I believe Zelensky played it wrong a few months ago and he should have been more diplomatic. But I disagree with how you are framing the original mineral deal and it was not foolish for Ukraine to be hesitant about it. In fact, the new mineral deal, being much better for Ukraine, proves that it was not a foolish decision to reject it.
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Loosely in line, though I'm not on record so you'll have to take my word for it. My expectation for this entire tariff routine is that after a great deal of can-kicking things will settle into a slightly-to-moderately worse approximation of status quo ante that will be harmful but not catastrophic. Trump will present this as a massive win.
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The tariff's hurt China too. For reasons I can only speculate, all I've ever heard about tariffs are that they are stupid when the US does it, and brilliant when other countries (especially China) do them to us to protect their industrial base. While there may be something to the specific circumstances that could support this narrative, it is rarely evident in the reporting. If you've ever been inoculated against Gell-Mann Amnesia, you'd detect a psyop going on here.
China has basically stopped even reporting financial figures, not even the fraudulent ones you need to read between the lines of. There is effectively no reliable information about how the tariff's are impacting China's economy. But rumors are coming out that it's manufacturing sector in panicking, with factories sitting idle and orders drying up. Even if reshoring is years away, companies literally cannot afford to order from China while the tariff's are in place. I was watching some of Gamer's Nexus's coverage of the tariffs, and companies were saying that with the tariff's they would lose $100+ selling a $100 PC case for example. So all they can do is shut down production and hope a solution presents itself. They haven't sold through their US stock (yet), but they sure as shit have cancelled their orders no matter what the penalty they have to pay.
There have been rumours like this for the last 10 years at least. Remember Evergrande?
Obviously the tariffs hurt the Chinese economy but it's the biggest manufacturer in the world, the biggest trading nation in the world and the biggest economy in the world in terms of production as opposed to accounting tricks. Energy in the US is more expensive than China - higher US GDP! Burger King has been selling burgers at US $1.37 in China, there's a massive price war in just about everything. Lower China GDP! When you use appropriate metrics for economic size, China surpassed the US a long time ago.
Thus I'm sceptical of the China-collapse narrative. Big things are tough and hard to break. COVID hit China pretty hard but they tanked it and moved on without any inflation. Tariffs aren't going to do more economic damage than COVID.
By the time demographic shrinking really kicks in, they'll have a gigantic, automated industrial base and still enjoy a huge pool of STEM talent. Nothing short of losing WW3 is going to stop China.
So of course there will be factories that are hard hit and go out of business. But China is not short of factories, they have huge capacity. During the Great Depression the US was in a very poor state but they were still the biggest economy on the planet. Likewise with China, except they're not in a Great Depression.
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Everyone has been saying that the $100 case will now cost $200, but it seems the companies here aren't willing to raise prices and bet on that.
If nothing else, this seems like it will provide some interesting data on the exact shape of supply/demand curves. I doubt either extreme is exactly right: prices will probably go up (if nothing else, to cover the tariff), and demand will probably go down. But as to exactly how much of each, nobody wants to admit it's a bit unknown.
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I factored that in to my prediction when I made it. Do you think the situation over there is so dire that they can't even afford to try and save face?
They have state controlled media. They can always just lie. Also, they can just cheat on whatever deals they do make and brag about it. Maybe Trump won't even notice.
I donno man. Even before 2024 Trump, I've been seen weird "read between the lines" predictions that China's economy is secretly fucked. But I never know what to take seriously, because it's basically a choice between believing state run media, or cranks. One side says everything is amazing and they have 8% GDP growth, the other side says China is already in a recession.
Then again, they say the same thing about the US...
But I find it not impossible to believe that inside the black box that is the Chinese economy, the wheels already came off long ago and it's just barely holding together with chewing gum and rubber bands.
And the rubber bands were manufactured in China.
Unless China is absolutely fudging their population numbers to UNDERCOUNT their population drastically (which would be a galaxy-brained move) then they are absolutely fucked in the medium term. There is no way to counterbalance a population where there's a massive class of consumers (the old and decrepit) and not nearly enough producers (young-middle aged workers) to keep everyone at a reasonable standard of living.
Its baked in. The collapse will come, Wile-E-Coyote already ran off the cliff, but they may be able to keep him from looking down for a while with propaganda and manipulation, or manage the fall down better than expected.
The problem with all this nonsense (yours and @WhiningCoil's) is the projection of the degenerate American condition where somewhat organized 20th century things are next to impossible to do, so you have to rely on Bronze age factors like the proportion of – to a large extent functionally illiterate, obese, criminal and unhealthy, but at least physically mobile – population to kick the can down the road. Infrastructure cannot be adapted. Automation cannot be done, that's fake news, that'd require, like, electric engineering and other nerd shit that doesn't offer good P/E for the financial fraud class to get fat off. The olds will consume the surplus, or else revolt, because you cannot do anything against pensioners (eg provide very cheap industrialized welfare to have them shut up, or as @veqq says, just let them live out their lives in the naturally cheap countryside). Housing bubble will crash and bury the economy, because of course, the debt is secretly much higher than it seems, because Communists always lie with their fake statistics, we learned that from the Soviet Union, the previous “champion” of electronics exports and gacha games.
It's surreal to watch how their nation-scale companies like BYD operate, compare this to the shambolic, truly late Soviet bullshit going on in the US, and then observe all this Gordon Chang tier punditry. Their working age population is right now just short of 1 billion people. They're, it seems, overall higher quality people too, they live longer, ask for less and work harder. Tighter margins all around, higher efficiency of converting revenue to capex… There is, admittedly, a lot of population locked in agriculture and low-productivity sectors, so fine, the effective discrepancy in workforce might be “only” 5x. Do you seriously imagine that economies of scale in a nation with 5x the American workforce will amount to Wile-E-Coyote running off a cliff. Okay, I'll keep watching how it goes.
Yes. Find me a single instance in history where a nation was able smoothly transition through a period of declining population as the old begin to outnumber the young.
Especially one that is utterly dependent on continued imports of agricultural products and energy and most raw materials for that workforce to do anything productive.
https://www.cfr.org/article/china-increasingly-relies-imported-food-thats-problem
https://www.eia.gov/todayinenergy/detail.php?id=62804
They are simply unprepared to weather any situation where they can't afford to purchase necessary economic inputs from other countries.
Which is what their population cliff threatens to cause.
Can you give me a list of failure cases?
This is uncharted territory. All developed countries are aging, and all of them are losing out in overall population productivity through some combination of aging, dysgenics and demographic replacement. It's not even clear that China is declining faster than the US – at the very least, they are consistently graduating more and more highly educated workers, while Americans are struggling to hire literate people for menial jobs. Quantitatively, Chinese workforce size will continue to exceed the entire Western world's one for decades. Dependency ratio will reach Japanese levels in, what, 2045? This is not serious.
What does this have to do with anything? They'll keep importing soybeans from Brazil and iron from Australia. They have $1T trade surplus and, for some years, have been annually installing as much or more industrial automation than the entire rest of the world combined. Their problem right now is not workforce, but that the world is too poor to absorb their exports.
Do you just operate on the assumption that China is a land of mobilized peasants gluing sneakers by hand, and when peasants get old, the gig is over?
Will they?
Population decline isn't limited to China.
https://agenciadenoticias.ibge.gov.br/en/agencia-news/2184-news-agency/news/41065-populacao-do-pais-vai-parar-de-crescer-em-2042
https://www.abs.gov.au/media-centre/media-releases/birth-rate-continues-decline
Lot of countries in the same boat. Every country wrangling with population decline at around the same time means they all have to handle internal economic strife, and may not be able to maintain productivity needed to export as much.
I operate on the assumption that China relies on international trade, and the PRIMARY value they provide to trade for is cheap skilled labor and, concurrently, massively industrialized manufacturing.
Both of which rely heavily on their population remaining steady.
I operate on the assumption that China has no fallbacks if they lose the ability to provide cheap labor and manufacturing to the world.
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I don't think this is entirely true – my understanding is that a lack of population growth is considered a contributor to the decline of the Roman Empire, and I suspect (although I haven't put intense study into the issue) that similar factors may have contributed to poor French performance in the Second World War as well. I think there are distinguishing factors in all of these cases, but to the extent that we have historical analogies, they give us cold comfort.
And yet it is unable to employ all of those workers – the United States has a better youth employment rate than China (even after China "recalculated" their data to make it look better). Perhaps you and Faceh are focusing on the wrong Chinese employment problem.
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The denominator here is likely to be extremely low.
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They don't have much wealth. Because wages continue to increase quickly, the 30-40 year olds are sending their parents more money each year than their whole anemic pensions, while saving themselves (although what asset classes they can save substantial sums in, is questionable right now.) It's not like the US where e.g. retired UPS workers get pension adjustments over inflation while current workers don't and aren't on track to receive any such benefits. (Also, the Chinese old seem to return to/reside in the country side, living very cheaply and consuming even less than their paltry wealth would suggest, compared to the racket of e.g. US retirement homes.)
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Yes, there is. "Keep everyone at a reasonable standard of living" is not a requirement for what remains a Communist dictatorship.
I don't see the disagreement?
The economy will have to contract, this will lead to lower standards of living, and thus there's no way China can maintain its status as a continually growing economy?
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But it is a requirement for ruling China. The communist party knows that its mandate comes from being able to "Keep everyone at a reasonable standard of living" ; in fact, the mandate for anyone ruling China, communist or not, is to fulfill that need.
If they can't guarentee reasonable standards of living, then revolution and uprisings are on the table.
That it is not, as Mao demonstrated.
It is perhaps more accurate to consider the pre- and post-Mao CCP as entities that share continuity but otherwise represents a break, in the same way that the Tang overthrew the Sui in the 6th century (after the Sui were bankrupting the country to invade Goguryeo) but essentially retained its edit: broad institutions and ministries.
One important thing to note about the Mandate of Heaven is that it is less extensive than the divine right of kings elsewhere in the world. The right to rebellion is explicitly written into the Mandate of Heaven.
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I mean, compared to the disasters and mismanagement that occurred pre-mao, the great leap forward really isn't that much worse. Regardless, Deng came to power right after and instituted his reforms; I'd say a prolonged period of mismanagement would have definitely sparked another revolution.
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I don't know about "secretly fucked". But they are very dependent on exports, and the US is their second largest market (after the E.U.), so whether they were fucked before or not, the tariffs fuck them now.
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I think there's at least two reasons combining here. One is the usual anti-Trump stuff (anything Trump does is bad), and the other is China boosterism (China is the greatest, they will crush the US industrially and their hypersonic missiles will destroy all our carriers and Taiwan will be theirs). Some of which is mere anti-Americanism/anti-Westernism and some of which is straight up enemy action from Chinese agents.
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