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US-China trade talks, tariffs, and Trump’s ‘America First’ foreign policy

Is Trump’s manner of ‘deal making’ ‘winning’ the day?

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After Trump declared that doing business with China was bad business and bad for the US, because of America’s trade deficit with China and China’s alleged ‘unfair’ business practices, he levied tariffs on Chinese imports, which were quickly followed by Chinese retaliatory measures, which the US then countered with yet another round of tariffs.

After the game played out for roughly another two months, the two parties decided to come to the table and try to hash out their differences. Washington and Beijing have apparently agreed to back off on the tariff threats, America, if China buys more American stuff, and the Chinese, if America backs off on its punitive tariffs.

But what’s the story here, and is this even really addressing the problems that were cited by Trump when he decided to introduce the tariffs in the first place?

CNBC observes:

Triumphant tones coming from the White House over the weekend are inconsequential, Moody’s chief economist said Monday, deflating hopes that the U.S. is gaining major ground in its negotiations with China aimed at averting a trade war.

“I think it’s a lose-lose. There are no winners here,” Mark Zandi told CNBC’s “Squawk Box Europe” on Monday. “This is face-saving, because clearly they’re not going come to terms on anything — at least, not in the near-team.”

Zandi was referring to Treasury Secretary Steven Mnuchin’s announcement Sunday that a looming trade war was “on hold” as the world’s two largest economies agreed to drop their tariff threats and discuss parameters for a wider trade agreement.

China consented to continue discussing measures under which it would purchase more U.S. products in order to reduce the $335 billion annual trade deficit between the two, but no specific dollar number was put forward. Zandi pointed to this as evidence that neither Washington nor Beijing had a plan, nor did either know what it specifically was they wanted from the ongoing talks.

“When you get right down to it, what exactly are they going to do? Are they going lower the Chinese-U.S. bilateral trade deficit? It’s just not going to happen. They’re kicking it down the road because they really don’t know what they want,” Zandi said.

‘A silly debate argument’
President Donald Trump had initially set out a demand that China close its trade surplus by $200 billion, to which Beijing has not acquiesced. Zandi criticized this figure, noting that U.S. exports to China are currently $150 billion annually, and that it doesn’t have the capacity to produce and export that scale of increase in goods to China.

“What’s that going to buy? For $200 billion?” the economist asked. “We don’t want to sell them technology, where our comparative advantage is, so we’re going to sell them $200 billion more of what? Soybeans? Boeing aircraft?”

Trade experts have argued that Chinese demand for these U.S. products will not sufficiently increase to the point where it would need to purchase such a volume of American goods.

Zandi added that the discussions should have instead been focused on structural issues like intellectual property (IP) protection for investors, echoing the sentiment of many economists that the trade deficit figure should not be the focus of the U.S.-China trade relationship.

“America wants the Chinese to buy $200 billion more of what America produces, but it’s neither here nor there when it comes to protecting IP rights, which is really what we should be focused on here,” he said. “I think it’s a silly debate argument that is going to end up nowhere.”

Other experts have warned that a deal with China focused on a dollar figure for trade is not a sustainable solution in the long term. Frank Lavin, a former U.S. under-secretary of commerce for international trade, told CNBC on Monday that a narrow focus on the trade imbalance misses the more pertinent issues at hand.

“If they (China) give you a check, watch out. They’re sort of buying you off and getting you just to go away for that money, so be careful of that,” Lavin said. “I’d say focus more on structural changes, getting market opening, fair treatment, level playing field, IP (intellectual property) issues, investment protection.”

U.S. Trade Representative Robert Lighthizer made this point Sunday, saying in a statement: “Real structural change is necessary. Nothing less than the future of tens of millions of American jobs is at stake.”

‘Fruitful and efficient’
Administration officials, meanwhile, touted the progress as a positive for the U.S., and markets have reacted positively to the news.

Chinese Vice Premier Liu He described the talks as “pragmatic, fruitful and efficient,” a marked shift from more negative sentiment earlier in the week that led Trump to say Thursday that he “doubted” the trade negotiations would succeed.

A joint statement from the weekend’s meetings said: “To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services.” The purchase increases are said to be predominantly in the agricultural and energy sectors.

Talks between U.S. and Chinese officials have been underway in recent weeks following a rapid escalation in tensions between the two economic powerhouses.

Trump has long criticized China’s growing trade surplus with the U.S., and in March set off a trade spat by proposing import tariffs on a number of Chinese goods. The move set off a tit-for-tat dispute with a series of threats from each country that proposed hundreds of billions of dollars worth of tariffs on each other’s goods, sparking fears of a global trade war.

Essentially, the Trump administration is saying to the Chinese ‘look, we might pull back on those tariffs that you don’t seem to like all that much if you decide to be a good country and buy more of our stuff’, which the Chinese appear to be receiving quite well. Cough up $200 billion more to send to America and the tariffs go away.

But how does this really address the underlying reasons why Trump imposed the tariffs to begin with? As the CNBC article points out, this initial understanding does not meaningfully address China’s ‘unfair’ business practices, namely the alleged theft of intellectual property from American firms as a condition for market access.

But Trump has been on this trade deficit bandwagon lately, and so it seems that if China addresses this, then the US will go its merry way and not be quite as insistent or impose penalties for ‘bad behaviour’.

But $200 billion is still a lot more than the alleged $50 billion that Trump alleged is the monetary figure for stolen intellectual property damage, so that it might seem that China is providing a lot more value to America than it would seem to be getting in return. Is Trump’s manner of ‘deal making’ ‘winning’ the day?

And if the reason why those tariffs were imposed in the first place isn’t experiencing a resolution, then are we to conclude that the reasoning provided by the Trump admin to impose them initially were entirely bogus?

Can we chalk them up to America pursuing a course of action as a ‘retaliation’ for something that they really don’t view as a priority, meaning that America is being dishonest with the international community?

An outsider looking at this situation may conclude that Trump didn’t really care about China’s business practices, and this was all really about the trade deficit.

Politically, however, China still wouldn’t be being a ‘good country’ if it really moved forward on this because of the economic initiatives that it has been erecting throughout Asia, which the US has perceived as a threat to America’s security.

It doesn’t contemplate China’s increasing economic and military cooperation with another ‘bad guy’ nation, Russia.

And what about China’s economic ties with Iran, which America has deemed a state sponsor of terror? After all, China just opened a rail link with Iran, promised to help them with their nuclear development, and is set to expand commerce with Iran the near future.

What about China’s ‘nefarious’ activities in the South China Sea?

How about the manner in which China is ‘influencing’ Kim Jong Un and the North Korean peace process?

What about China’s attempt to compete with the US petrodollar with its new petroyuan, potentially undermining the value of the dollar’s position on the global market?

None of this jives with America’s foreign policy interests, so that it really can’t be conceived that America is just going to stand by and watch as China increases its international political and economic prowess.

A couple of different possibilities arise as to how and why the negotiations are taking place now, before all of America’s tariffs come into effect, and why America seems to be willing to settle for so little. Clearly, Trump is not intending to use this as a way of settling the multitude of issues and conflict of national interests in these trade talks.

Perhaps Washington is realizing that it can’t afford a prolonged trade war with one of its largest trading partner, which shifts China’s focus to supplementing its market with goods from other nations that don’t fit Washington’s interests, such as Russia. Or, perhaps Trump is attempting to pass off a reduction of a trade deficit as a victory, in order to say to the public that he is accomplishing yet another election promise, as a part of his disjointed foreign policy.

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Foreign Banks Are Embracing Russia’s Alternative To SWIFT, Moscow Says

Given its status as a major energy exporter, Russia has leverage that could help attract partners to its new SWIFT alternative.

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Via Zerohedge


On Friday, one day after Russia and China pledged to reduce their reliance on the dollar by increasing the amount of bilateral trade conducted in rubles and yuan (a goal toward which much progress has already been made over the past three years), Russia’s Central Bank provided the latest update on Moscow’s alternative to US-dominated international payments network SWIFT.

Moscow started working on the project back in 2014, when international sanctions over Russia’s annexation of Crimea inspired fears that the country’s largest banks would soon be cut off from SWIFT which, though it’s based in Belgium and claims to be politically neutral, is effectively controlled by the US Treasury.

Today, the Russian alternative, known as the System for Transfer of Financial Messages, has attracted a modest amount of support within the Russian business community, with 416 Russian companies having joined as of September, including the Russian Federal Treasury and large state corporations likeGazprom Neft and Rosneft.

And now, eight months after a senior Russian official advised that “our banks are ready to turn off SWIFT,” it appears the system has reached another milestone in its development: It’s ready to take on international partners in the quest to de-dollarize and end the US’s leverage over the international financial system. A Russian official advised that non-residents will begin joining the system “this year,” according to RT.

“Non-residents will start connecting to us this year. People are already turning to us,”said First Deputy Governor of the Central Bank of Russia Olga Skorobogatova. Earlier, the official said that by using the alternative payment system foreign firms would be able to do business with sanctioned Russian companies.

Turkey, China, India and others are among the countries that might be interested in a SWIFT alternative, as Russian President Vladimir Putin pointed out in a speech earlier this month, the US’s willingness to blithely sanction countries from Iran to Venezuela and beyond will eventually rebound on the US economy by undermining the dollar’s status as the world’s reserve currency.

To be sure, the Russians aren’t the only ones building a SWIFT alternative to help avoid US sanctions. Russia and China, along with the European Union are launching an interbank payments network known as the Special Purpose Vehicle to help companies pursue “legitimate business with Iran” in defiance of US sanctions.

Given its status as a major energy exporter, Russia has leverage that could help attract partners to its new SWIFT alternative. For one, much of Europe is dependent on Russian natural gas and oil.

And as Russian trade with other US rivals increases, Moscow’s payments network will look increasingly attractive,particularly if buyers of Russian crude have no other alternatives to pay for their goods.

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US leaving INF will put nuclear non-proliferation at risk & may lead to ‘complete chaos’

The US is pulling out of a nuclear missile pact with Russia. The Intermediate-Range Nuclear Forces Treaty requires both countries to eliminate their short and medium-range atomic missiles.

The Duran

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Via RT


If the US ditches the Intermediate-Range Nuclear Forces Treaty (INF), it could collapse the entire nuclear non-proliferation system, and bring nuclear war even closer, Russian officials warn.

By ending the INF, Washington risks creating a domino effect which could endanger other landmark deals like the Strategic Arms Reduction Treaty (START) and collapse the existing non-proliferation mechanism as we know it, senior lawmaker Konstantin Kosachev said on Sunday.

The current iteration of the START treaty, which limits the deployment of all types of nuclear weapons, is due to expire in 2021. Kosachev, who chairs the Parliament’s Upper House Foreign Affairs Committee, warned that such an outcome pits mankind against “complete chaos in terms of nuclear weapons.”

“Now the US Western allies face a choice: either embarking on the same path, possibly leading to new war, or siding with common sense, at least for the sake of their self-preservation instinct.”

His remarks came after US President Donald Trump announced his intentions to “terminate” the INF, citing alleged violations of the deal by Russia.

Moscow has repeatedly denied undermining the treaty, pointing out that Trump has failed to produce any evidence of violations. Moreover, Russian officials insist that the deployment of US-made Mk 41 ground-based universal launching systems in Europe actually violates the agreement since the launchers are capable of firing mid-range cruise missiles.

Leonid Slutsky, who leads the Foreign Affairs Committee in parliament’s lower chamber, argued that Trump’s words are akin to placing “a huge mine under the whole disarmament process on the planet.”

The INF Treaty was signed in 1987 by then-President Ronald Reagan and Soviet leader Mikhail Gorbachev. The deal effectively bans the parties from having and developing short- and mid-range missiles of all types. According to the provisions, the US was obliged to destroy Pershing I and II launcher systems and BGM-109G Gryphon ground-launched cruise missiles. Moscow, meanwhile, pledged to remove the SS-20 and several other types of missiles from its nuclear arsenal.

Pershing missiles stationed in the US Army arsenal. © Hulton Archive / Getty Images ©

By scrapping the historic accord, Washington is trying to fulfill its “dream of a unipolar world,” a source within the Russian Foreign Ministry said.

“This decision fits into the US policy of ditching the international agreements which impose equal obligations on it and its partners, and render the ‘exceptionalism’ concept vulnerable.”

Deputy Foreign Minister Sergey Ryabkov denounced Trump’s threats as “blackmail” and said that Washington wants to dismantle the INF because it views the deal as a “problem” on its course for “total domination” in the military sphere.

The issue of nuclear arms treaties is too vital for national and global security to rush into hastily-made “emotional” decisions, the official explained. Russia is expecting to hear more on the US’ plans from Trump’s top security adviser, John Bolton, who is set to hold talks in Moscow tomorrow.

President Trump has been open about unilaterally pulling the US out of various international agreements if he deems them to be damaging to national interests. Earlier this year, Washington withdrew from the Joint Comprehensive Plan of Action (JCPOA) on the Iranian nuclear program. All other signatories to the landmark agreement, including Russia, China, and the EU, decided to stick to the deal, while blasting Trump for leaving.

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Converting Khashoggi into Cash

After two weeks of denying any connection to Khashoggi’s disappearance, Riyadh has admitted that he was killed by Saudi operatives but it wasn’t really on purpose.

Jim Jatras

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Authored by James George Jatras via The Strategic Culture Foundation:


The hazard of writing about the Saudis’ absurd gyrations as they seek to avoid blame for the murder of the late, not notably great journalist and Muslim Brotherhood activist Jamal Khashoggi is that by the time a sentence is finished, the landscape may have changed again.

As though right on cue, the narrative has just taken another sharp turn.

After two weeks of denying any connection to Khashoggi’s disappearance, Riyadh has ‘fessed up (sorta) and admitted that he was killed by Saudi operatives but it wasn’t really on purpose:

Y’see, it was kinda’f an ‘accident.’

Oops…

Y’see the guys were arguing, and … uh … a fistfight broke out.

Yeah, that’s it … a ‘fistfight.’

And before you know it poor Jamal had gone all to pieces.

Y’see?

Must’ve been a helluva fistfight.

The figurative digital ink wasn’t even dry on that whopper before American politicos in both parties were calling it out:

  • “To say that I am skeptical of the new Saudi narrative about Mr. Khashoggi is an understatement,” tweeted Republican Sen. Lindsey Graham of South Carolina. “First we were told Mr. Khashoggi supposedly left the consulate and there was blanket denial of any Saudi involvement. Now, a fight breaks out and he’s killed in the consulate, all without knowledge of Crown Prince. It’s hard to find this latest ‘explanation‘ as credible.”
  • California Rep. Adam Schiff, the ranking Democrat on the House Intelligence Committee, said in a statement that the new Saudi explanation is “not credible.” “If Khashoggi was fighting inside the Saudi consulate in Istanbul, he was fighting for his life with people sent to capture or kill him,” Schiff said. “The kingdom and all involved in this brutal murder must be held accountable, and if the Trump administration will not take the lead, Congress must.”

Turkish President Recep Tayyip Erdogan must think he’s already died and gone to his eternal recreation in the amorous embraces of the dark-eyed houris. The acid test for the viability of Riyadh’s newest transparent lie is whether the Turks actually have, as they claim, live recordings of Khashoggi’s interrogation, torture, murder, and dismemberment (not necessarily in that order) – and if they do, when Erdogan decides it’s the right time to release them.

Erdogan has got the Saudis over a barrel and he’ll squeeze everything he can out of them.

From the beginning, the Khashoggi story wasn’t really about the fate of one man. The Saudis have been getting away with bloody murder, literally, for years. They’re daily slaughtering the civilian population of Yemen with American and British help, with barely a ho-hum from the sensitive consciences always ready to invoke the so-called “responsibility to protect” Muslims in Bosnia, Kosovo, Libya, Syria, Xinjiang, Rakhine, and so forth.

Where’s the responsibility not to help a crazed bunch of Wahhabist head-choppers kill people?

But now, just one guy meets a grisly end and suddenly it’s the most important homicide since the Lindbergh baby.

What gives?

Is it because Khashoggi was part of the MSM aristocracy, on account of his relationship with the Washington Post?

Was it because of his other, darker, connections? As related by Moon of Alabama: “Khashoggi was a rather shady guy. A ‘journalist’ who was also an operator for Saudi and U.S. intelligence services. He was an early recruit of the Muslim Brotherhood.” This relationship, writes MoA, touches on the interests of pretty much everyone in the region:

“The Ottoman empire ruled over much of the Arab world. The neo-Ottoman wannabe-Sultan Recep Tayyip Erdogan would like to regain that historic position for Turkey. His main competition in this are the al-Sauds. They have much more money and are strategically aligned with Israel and the United States, while Turkey under Erdogan is more or less isolated. The religious-political element of the competition is represented on one side by the Muslim Brotherhood, ‘democratic’ Islamists to which Erdogan belongs, and the Wahhabi absolutists on the other side.”

With the noose tightening around Saudi Crown Prince Mohammad bin Salman (MbS), the risible fistfight cock-and-bull story is likely to be the best they can come up with. US President Donald Trump’s having offered his “rogue killers” opening suggests he’s willing to play along. Nobody will really be fooled, but MbS will hope he can persuade important people to pretend they are fooled.

That will mean spreading around a lot of cash. The new alchemy of converting Khashoggi dead into financial gain for the living is just one part of an obvious scheme to pull off what Libya’s Muammar Kaddafi managed after the 1988 Lockerbie bombing: offer up some underlings as the fall guys and let the top man evade responsibility. (KARMA ALERT: That didn’t do Kaddafi any good in the long run.)

In the Saudi case the Lockerbie dodge will be harder, as there are already pictures of men at the Istanbul Consulate General identified as close associates of MbS. But they’ll give it the old madrasa try anyway since it’s all they’ve got.Firings and arrests have started and one suspect has already died in a suspicious automobile “accident.” Heads will roll!

Saving MbS’s skin and his succession to the throne of his doddering father may depend on how many of the usual recipients of Saudi – let’s be honest – bribery and influence peddling will find sufficient pecuniary reason to go along. Saudi Arabia’s unofficial motto with respect to the US establishment might as well be: “The green poultice heals all wounds.”

Anyway, that’s been their experience up to now, but it also in part reflects the same arrogance that made MbS think he could continue to get away with anything. (It’s not shooting someone in the middle of Fifth Avenue, but it’s close.) Whether spreading cash around will continue to have the same salubrious effect it always has had in the past remains to be seen.

To be sure, Trump may succeed in shaking the Saudi date palm for additional billions for arms sales. That won’t necessarily turn around an image problem that may not have a remedy. But still, count on more cash going to high-price lobbying and image-control shops eager to make obscene money working for their obscene client. Some big American names are dropping are dropping Riyadh in a sudden fit of fastidiousness, but you can bet others will be eager to step into their Guccis, both in the US and in the United Kingdom. (It should never be forgotten how closely linked the US and UK establishments are in the Middle East, and to the Saudis in particular.)

It still might not work though. No matter how much expensive PR lipstick the spinmeisters put on this pig, that won’t make it kissable. It’s still a pig.

Others benefitting from hanging Khashoggi’s death around MbS’s neck are:

  • Qatar (after last year’s invasion scare, there’s no doubt a bit of Schadenfreude and (figurative) champagne corks popping in Doha over MbS’s discomfiture. As one source close to the ruling al-Thani family relates, “The Qataris are stunned speechless at Saudi incompetence!” You just can’t get good help these days).

Among the losers one must count Israel and especially Prime Minister Bibi Netanyahu. MbS, with his contrived image as the reformer, was the Sunni “beard” he needed to get the US to assemble an “Arab NATO” (as though one NATO weren’t bad enough!) and eliminate Iran for him. It remains to be seen how far that agenda has been set back.

Whether or not MbS survives or is removed – perhaps with extreme prejudice – there’s no doubt Saudi Arabia is the big loser. Question are being asked that should have been asked years ago. As Srdja Trifkovic comments in Chronicles magazine:

“The crown prince’s recklessness in ordering the murder of Khashoggi has demonstrated that he is just a standard despot, a Mafia don with oil presiding over an extended cleptocracy of inbred parasites. The KSA will not be reformed because it is structurally not capable of reform. The regime in Riyadh which stops being a playground of great wealth, protected by a large investment in theocratic excess, would not be ‘Saudi’ any longer. Saudia delenda est.”

The first Saudi state, the Emirate of Diriyah, went belly up in 1818, with the death of head of the house of al-Saud, Abdullah bin Saud – actually, literally with his head hung on a gate in Constantinople by Erdogan’s Ottoman predecessor, Sultan Mahmud II.

The second Saudi state, Emirate of Nejd, likewise folded in 1891.

It’s long past time this third and current abomination joined its antecedents on the ash heap of history.

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