Donald Trump’s damn the torpedoes quest to slap tariffs on $517 billion worth of Chinese imports appears to be crystalizing nicely. The hope is that China will find God (God is American, by the way) and mend its wicked ways. The pain will not be one sided though. America may be the 800-pound gorilla in this dust up but it’s one hell of a pampered 800-pound gorilla. This is where Peter Navarro and Robert Lighthizer, architects of the U.S. tariff choke hold, could be miscalculating. And if we know anything about this administration it’s this: what could go wrong has not been discussed.
As Trump tells it, we hold all the cards. Thanks to their massive trade surplus, it’s impossible for China to respond with like-for-like tariffs. They’d run out of goods before we would. The U.S. economy is larger, more diversified and more resilient. Or as Commerce Secretary Wilbur Ross put it, “we have more bullets”. With the U.S. economy tick-tocking like a Swiss clock, America has the luxury of negotiating from strength. Always a plus. Trade wars really are easy to win. Just brandish your trusty tariff stick and let the Asian capitulation begin.
What if America lands its best tariff shots only to find China still standing? Tariffs on Chinese goods currently rest at $250 billion and it’s not as if Beijing is exactly gagging for a deal. What if we woke up one morning to find ourselves in a max-tariff world? That’s when things would get interesting. In this world, America isn’t nearly as intimidating. In this world, several things would undoubtedly occur. Since critical analysis isn’t our President’s strong suit, we’ll take on the task for him. Let’s ponder what might happen if Xi Jinping (that’s SHEE chin-PING) decides kissing Donald Trump’s pinky ring isn’t a look he’d prefer to be known for. More