The tariff trouble

With so much criticism of the tariff turmoil, a Chronicle reader sent us this insight. It’s written by Joel Ross of Citadel Realty Advisors who publishes a $300 a year subscription newsletter based on economic data.

To understand the trade war with China, you need to understand that China is having a major slowdown economically.

The stock market is down 25%. Many banks are being bailed out by the government. Everything and everyone in China is way over levered, and the economy is in a high risk position which the government was trying to fix.

The trade war got in the way, forcing the government to subsidize the smaller banks.

China is loaning tens of billions to countries like Pakistan to build ports and railroads and infrastructure. Problem is, these countries have zero possible ways to ever repay these loans. So now they are faced with stopping the projects or asking the IMF to bail them out. It is a mess for China and the countries who took the loans.

There is starting to be pushback against China. Trump’s timing to go after China is exactly right. They are in a weakened position now. Ignore all the hype about how they could sell their $1.4 trillion of US Treasuries to who?? Not going to happen.

The whole world agrees China violates every rule on trade and steals IP. Trump is the only one willing to take them on, with the rest of the world cheering him on from the sidelines. Now it appears the EU is willing to cooperate with Trump and revise the WTO and to push China on IP and other trade violations. Something they were never willing to do before.

The leftwing media said in 2016 and early 2017 that 2% was the new normal maximum and the US was at its peak and we faced economic decline. Some in the media and Wall St said getting above 2% was pure fantasy, and Trump was dreaming.

Ignore the talking heads and the mainstream media. Almost none are objective.