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Just when things seemed to be settling down a little bit, our conflict with China has suddenly escalated to a dangerous new phase. This is not simply just a “trade war” any longer, and our relationship with China will never be the same again. As you will see below, President Trump just referred to Chinese President Xi Jinping as our “enemy”, and this is something that the Chinese are going to take extremely seriously. In China, the national leader is a representation of the government as a whole, and the government as a whole is a representation of the entire county. So to the Chinese people, what Trump just said will be interpreted as “the United States and China are now enemies”. Of course for Trump everything would be forgiven tomorrow if the Chinese totally caved in to his demands and started saying all sorts of nice things about him, but for the Chinese what has transpired in recent months will be remembered for generations. President Trump has insulted their national honor over and over again, and that sort of thing may not mean much to us here in the western world anymore, but over in China their sense of honor is central to who they are as a people. After everything that has already been said and done, there will be no going back, and we are now facing a future in which the United States and China will be very bitter enemies.
In response to previously announced U.S. tariffs, China stunned global markets when it announced a new wave of tariffs on U.S. goods early on Friday. After Trump learned of this, he hit the ceiling, and he immediately went on a Twitter rant in which he pledged to hit Chinese goods with even higher tariffs. Trump then tweeted that American companies “are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” He did not immediately detail the authority he thought he could use to compel firms to leave China.
When I first saw that I could hardly believe what I was seeing, and you may have had the same reaction.
Can Trump actually do that?
Well, no, the truth is that he can’t.
He can certainly encourage U.S. businesses to leave China, but as CNN has pointed out, he doesn’t have the authority to unilaterally order all of our companies to leave an entire country
And on top of everything else, President Trump posted another tweet in which he called Chinese President Xi Jinping our “enemy”.
Sure enough, in response China said it would continue fighting the trade war with the US “until the end” as tit-for-tat escalation is now virtually assured with no end in sight. On Saturday, China’s commerce ministry issued a statement calling on Washington not to “misjudge the situation and underestimate the determination of Chinese people” after US President Donald Trump announced new tariffs on Chinese imports. “The US should immediately stop its wrong action, or it will have to bear all consequences,” the statement said.
Any hopes for a trade deal with China during the Trump administration were already dead, but this has put even more nails in the coffin.
When the outlook for the U.S. economy was brighter, getting a trade deal with China done was not so critical for Trump, but now things have dramatically changed.
At this point, even the White House’s own internal forecasts are showing “that the economy could slow markedly over the next year”
Things just continue to get even bleaker. U.S. manufacturing just contracted for the very first time since 2009, and the financial markets are starting to figure out that there aren’t any promising solutions on the horizon.
On Friday, the trade war turmoil greatly spooked investors and the Dow ended the day down more than 600 points
As I noted at the end of last month, the stock market started to decline in July, and now it has fallen every single week here in August. Just like in “The Beginning Of The End”, we are potentially facing a scenario in which we experience great economic and financial turmoil during the second half of the year.
Over and over again, I have kept warning my readers that our relations with China were going to get progressively worse. We have been expecting this for a long time, but most Americans still do not grasp the implications of this crisis.
This conflict between the United States and China is going to change everything. An extraordinary amount of pain is heading our way, and our society is completely and utterly unprepared to handle it.
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