Meraglim Blog

How Are Those Tariffs Working out? Not Too Well for China

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

 

The U.S.-China trade war started in January 2018 with Trump’s announcement of tariffs on solar panels and appliances that applied broadly, but were mostly aimed at China. It escalated quickly from there with China announcing retaliatory tariffs and Trump doubling down with more tariffs on Chinese steel and electronics.

China escalated again and the two parties were almost at the point of 25% tariffs on 100% of all goods traded between them before a “truce” was declared in early December to allow time for negotiations. The truce expires March 1.

Many observers assumed the trade war would lead immediately to a drastic reduction of U.S.-China trade and a reduction in the U.S. trade deficit with China. Neither of those events happened. As this article describes, China’s trade surplus with the U.S. actually reached a new record in 2018 of $323 billion, a 17% increase in the surplus compared with 2017.

Many analysts interpreted the data to mean that Trump’s trade war is a failure and China will “win” the war. That’s not correct. The China trade surplus represents U.S. importers trying to buy as much as they could from China before the tariffs were put in place. It takes about six months from the time tariffs are announced to when they apply.

Since tariffs were announced between January and June, U.S. importers have been busy loading up on inventory in the second and third quarters of 2018 to “beat” the tariff hikes. That explains the surplus.

What happens next will be more interesting. With U.S. businesses loaded up on Chinese inventory, U.S. growth slowing and tariffs finally taking hold, China’s exports to the U.S. could fall off a cliff in early 2019.

Don’t believe the trade war happy talk going on right now. This trade war is about to get much worse.

Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

 

IF THE SCIENCE IS NOT ON YOUR SIDE, JUST TRY THREATS

It’s clear that good science does not support the extreme claims of the climate alarmists. Yes, there is such a thing as climate change, but it’s slow, difficult to predict and almost impossible to model because of the complexity of the process. The climate alarmists have grabbed most of the headlines for the past ten

Read More »

WHY TRUMP WILL WIN REELECTION: NOT POLLS OR PUNDITS; JUST COMMON SENSE

Political analysts use polls, betting odds, historic trends and other inputs to make their (usually wrong) political predictions. We all remember that “experts” said Hillary Clinton would win the presidency in 2016 (they gave her a 92% chance on the morning of the election), and that the UK would vote to “remain” in the EU

Read More »

HERE’S ANOTHER ELITE WITH ANOTHER PLAN TO TAX AWAY YOUR WEALTH

The elites never rest when it comes to devising new ways to take your money through taxes, inflation or outright confiscation. The latest Trojan horse the elites are riding to take your money is climate change. The climate does change over long periods of time for reasons that are not well understood except that they

Read More »

KRUGMAN SHOWS HE KNOWS LITTLE ABOUT ECONOMICS AND LESS ABOUT FINANCE

We already knew that Nobel Prize winner Paul Krugman knows almost nothing about economics. Now, we see from this article that he knows nothing about banking either. Krugman claims that the repeal of Glass-Steagall and the actions of banks in general were not the cause of the 2008 financial crisis. The conventional wisdom is that Lehman Brothers,

Read More »
Scroll to Top