The Witness Chronicles, 4/17/25
Trump tries but fails to slay the dragon
Trump is Already Losing the Trade War With China
There is no strategy, there are no talks, and we can’t afford to cut off trade
China experienced 5.4% economic growth in the first quarter. Xi Jingping is holding economic talks all over Asia and has ordered that no Boeing aircraft may be delivered to China. Trump reportedly has raised some Chinese tariffs to 245%, a sign he has no idea how to handle this.*
*This may be based on inaccurate data according to some sources. Others claim these rates are only on a limited number of products. The truth, like many stories out of the White House, is unclear.
Businesses, large and small across the US, are basically in a holding pattern as supply chains dry up and uncertainty rules. Many small businesses face immediate closure as products they sell from China become too expensive to make a profit.
China buys an estimated $180 billion in American goods and services while we buy nearly $500 billion from them. Our entire economy is tightly dependent on global trade and China is our largest trading partner. China just stopped trade in rare earth materials essential to our fighter jets and many other critical products. Our stealth jets have over 900lbs of rare earth products in each plane.
China has a near monopoly on processing these earths while the US has no processing facilities, which are complex, expensive, and take years to develop. I can cite endless other examples of similar indicators that we are losing this war that just started a few weeks ago.
And it appears that we are not talking to China because Trump’s ego requires China to call first, likely so he can claim they ‘begged’ him to make a deal.
For Xi to make that call he would lose enormous face, or reputation, within China and that is not going to happen in this lifetime. Xi knows he has the upper hand, giving him no reason to fold.
It’s extremely hard to overestimate the damage all of this is already doing to our economy at every level. Farm products, autos, technology, appliances, toys, and virtually everything else will get a lot more expensive if we can even get them.
US farmers are already demanding another bailout from the government as China stops buying US food products, including beef, which they are now getting from Australia, another Xi deal. Bailouts would be in direct opposition to Trump’s claimed cost cutting within the government.
So, what is Trump doing? We don’t know and that is probably because they don’t know what to do. It is rumored that there is a strategy in the White House that calls for talking our European allies into stopping their trade with China as leverage to bring China to the table.
That rumor so far has no basis in reality and there is little incentive for Europe to comply as their economies are equally tied to trade with China. Right now we are supposedly in talks with dozens of countries and industries to make deals over tariffs, though we have no evidence of any progress.
Meanwhile Trump’s attempts to extort Ivy League universities and mega-law firms are revealing that if deals are made and concessions granted to Trump, he will simply double down and keep demanding more. Our allies (and China) know Trump cannot be trusted to keep his word, because he never has, another major reason not to make deals with his administration.
Harvard has been standing up to Trump’s demands that they comply with his anti-diversity stance, which is basically white suprematism in disguise, and he has threatened to take away $9 billion in federal funding in revenge. Their courageous stance seems to be inspiring more institutions to join them in defiance, though the cost will be high. But it sends a strong message of resistance.
The red herring Trump has used to sway voters into thinking tariffs are wonderful is the reshoring of American manufacturing back to the US. As mentioned previously, there is the uncertainty factor which is keeping companies from committing to new plants or plans for growth.
Not only that, but labor costs and the costs of advanced manufacturing automation, not to mention raw materials, would mean prices would stay high. No responsible business management team would commit to building, given that reality and the likelihood that Trump would no longer be in power by the time a plant came online.
Is there a discernible path here, a positive way out? Not that I can see and I’m definitely looking. Nothing seems coordinated, nothing makes much sense, and we are only just seeing what will emerge to stop the carnage. The question is if it is too late.
Right now Trump is backed into a corner of his own making. And his team is squabbling and getting sloppy with critical things like national security. This week saw that three members of Defense Secretary Hegseth’s team ordered out of the Pentagon for their roles in those security issues. All three worked with Hegseth at one of the veterans’ organizations he ran and nearly ran into the ground.
This constant breathtaking incompetence is our greatest hope for an effective resistance campaign.
Right now the only winning issue for the Trump White House is immigration and deportations, so that is all we are hearing about, aided by their willingness to ignore federal judges and to double down on their right to ignore citizen’s rights.
But that is going to fade as the economy eats them alive in the coming months. Immigration was one of Trump’s big two issues in the election. Prices were the other and he has proven totally incompetent in dealing with them, stuck between giant tax cuts for billionaires and passing that cost onto us via the tariffs.
But billionaires are generally not idiots and they know a bad economy means a financial meltdown. And 99.999% of us are not even close to being billionaires. To most of the country when you talk about the economy, you are talking about how they are going to buy essentials like food, gas, and how to pay the bills.
Those are what conservatives call ‘populist’ issues because they affect the regular people, but populist simply means the vast majority of working Americans. So far Trump’s standing with those who voted for him is holding, but the real effects of a trade war with China have not yet reached into their wallets and job security.
It’s important to remember that we are literally only three months into this mess and that there is a lag time before those effects are widely felt by the American people. As they kick in, it is likely that things change, possibly in big ways.
I take some poor comfort in that awful reality.
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Martin Edic
"Talking our European allies into stopping their trade with China as leverage to bring China to the table"? Canada is already in talks with the EU to build a transcontinental economic 'superhighway' that leaves the U.S. totally out of it. And honestly, do we have any EU allies anymore? My bet is they're all talking economics and trade WITHOUT the U.S.
Two additional thoughts: (1) It is my understanding Tesla cars need those processed rare earth products so unavailability on that front should be interesting; (2) the Chinese hold huge amounts of U.S. debt, so if they did decide to play hardball by dumping debt, that would push U.S. borrowing costs sky high. Is it possible the administration didn't really think things through?