China Removes Comprehensive Trade Deal – Disastrous News For US Economy?
The Chinese never intended to make a deal, and now they are publicly admitting it. For months, I have been warning readers of The Economic Collapse Blog that a comprehensive trade deal with China will not happen before the 2020 presidential election, and the reason why this is the case is actually very simple. The Chinese have concluded that President Trump will never give them the kind of deal that they are looking for, and so their entire goal has been to run out the clock on the Trump administration so that they can finally get to a Democrat that will be much more “reasonable” to deal with. Of course, if Elizabeth Warren or Bernie Sanders wins the election, they won’t be very “reasonable” either, and so the best-case scenario for the Chinese is for either Joe Biden or Hillary Clinton to emerge victorious in November 2020. In any event, the Chinese are now being very clear about the fact that they are never, ever going to agree to Trump’s core demands. The following comes from CNBC…
Chinese officials are growing hesitant to pursue a broad trade deal with the U.S. in negotiations set to begin this Thursday, people familiar with the matter told Bloomberg News.
Vice Premier Liu He, who will lead negotiations for China, told dignitaries that his offer to the U.S. will not include commitments on reforming Chinese industrial policy or government subsidies, according to Bloomberg. These are among the Trump administration’s main demands in the trade talks.
In essence, the Chinese have completely taken a comprehensive trade deal off the table, and they probably believe that Trump’s looming impeachment may make him more agreeable to a more limited deal that would be more favorable to the Chinese.
But Trump is holding his ground, and he continues to insist that his negotiating stance has not changed…
Trump has said repeatedly he would entertain only an all-encompassing deal with China. People close to him say he remains firm in that view.
“We’ve had good moments with China. We’ve had bad moments with China. Right now, we’re in a very important stage in terms of possibly making a deal,” Trump told reporters on Friday. “But what we’re doing is we’re negotiating a very tough deal. If the deal is not going to be 100% for us, then we’re not going to make it.”
So what all of this means is that we should not expect any sort of a trade deal any time soon.
Unfortunately, the longer this trade war stretches on, the more painful it will become for our economy. Big companies are laying off workers all across America, and there are some industries that are being absolutely devastated by this trade conflict.
For example, just check out what has been happening to the lumber industry…
- China used to account for about half of all U.S. hardwood lumber exports, about $2 billion annually. The Trump administration’s 25% tariff cut that demand.
- In the 12 months since tariffs on U.S. hardwood were announced in July of last year, lumber exports to China were down by $615 million compared with the previous year, according to the American Hardwood Export Council.
- In June of this year alone, when the full tariff rate went into effect, trade volume to China was half what it was a year ago.
Of course, the lumber industry is far from alone. All over the country, the impact of the trade war can be clearly seen, and we just learned that September was the worst month for U.S. manufacturers in more than a decade.
As the U.S. economy slows down, the mainstream media will gleefully blame Trump for our troubles. Just check out the following excerpt from Paul Krugman’s most recent article entitled “Here Comes The Trump Slump”…
Now the U.S. economy is going through another partial slump. Once again, manufacturing is contracting. Agriculture is also taking a severe hit, as is shipping. Overall output and employment are still growing, but around a fifth of the economy is effectively in recession.
But unlike previous presidents, who were just unlucky to preside over slumps, Trump has done this to himself, largely by choosing to wage a trade war he insisted would be “good, and easy to win.”
Even though we are way overdue for a recession, and even though the Federal Reserve has more control over our economy than anyone else does, the mainstream media is going to relentlessly push the narrative that Trump’s trade war has created a giant mess for the U.S. economy. And without a doubt, this trade war is causing economic pain, but placing 100 percent of the blame on Trump is not intellectually honest.
Unfortunately, the mainstream media is just going to keep telling us that everything would be just fine if it wasn’t for this trade war. The following is an excerpt from a recent CNN article entitled “America’s economy is slowing. Ending the trade war could fix that”…
The Federal Reserve doesn’t have a magic wand to revive the slowing American economy. But President Donald Trump might.
New evidence emerged last week showing how tariffs and the vast uncertainty surrounding the US-China trade war are hurting the economy.
The manufacturing sector suffered its worst month since June 2009. Services, the larger portion of the modern economy, grew at its weakest pace in three years.
If a trade agreement could be reached, that would undoubtedly be a substantial short-term economic boost, but it wouldn’t really do anything to address our much larger problems.
Today, our entire financial system has become a giant Ponzi scheme. We are living in the terminal phase of the biggest debt bubble in the history of the world, and the only way to keep the Ponzi scheme going is to keep expanding the bubble with even more debt.
At some point, the entire sorry system is going to implode in spectacular fashion, and that is going to happen whether there is a trade deal with China or not.
But our trade war with China is certainly not helping matters, and if there is not a resolution soon it could certainly be one of the factors that helps to trigger our demise.
Article posted with permission from Michael Snyder