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Tariffs fuel inflation. Tariffs are an admission of failure to have a globally competitive productive economy. The USA has been reliant upon its hegemony over the global monetary and regulatory framework for decades. There is no easy fix. USA has been living beyond its means and accumulated crippling debt that nobody can see ever being repaid. Radical changes are needed and radical adaption will be the result. There will be pain. China has won the trade war and is now engaged in reverse engineering the USAs legacy hegemony.
China has won the trade war and is now engaged in reverse engineering the USAs legacy hegemony.
Could you elaborate on that?
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Yeah ok- China since Deng opened up has focused on taking on the west at its own game. China has size and massive resources- population, land and the ability to direct capital and human resources in a way the west does not. They set out very methodically to make things cheaper than other manufacturing economies and they have succeeded. By taking each element of the economy, labour, skills, infrastructure, capital allocation, investment, energy development etc you build an economy that produces almost everything cheaper- more efficiently than your competitors. At that point you gain control over commodity producers- you can pay the best prices and you are the largest buyer globally- in some commodities you invest in gaining ownership of the supply chain outside of China. Ultimately you build a global economy of infrastructure- roads, rail, shipping. Today China builds half of the shipping globally and is building ports globally. USA today builds 1% of shipping. A key part of Chinas success has been based on reverse engineering- western companies would set up factories to make their products in China with its lower overheads- Chinese would study and blueprint the factory process and then duplicate it- spawning multiple near identical factories producing the same product at ever lower cost- and outside of the control of the original western producer. USA cannot compete with the concerted economic model China has built- so USA imposes tariffs which increase the cost to the consumer and protect un-competitive US producers. China has won the trade war and it did it over a period of multiple decades building step by step upon its natural advantages. Putting on tariffs does not reverse Chinas advantage- it can still and will still be more efficient at producing most goods and will still control most global commodity markets. It is now logical for China to extend its strategy to control over protocols- like payment protocols- using the E-Yuan CBDC which it has already developed. It will almost certainly be the base protocol for any wider BRICS Pay alternative to SWIFT. When you have won the trade war already you must extend your reach into the tertiary levels of economic, trade, monetary and military protocols. USD hegemony developed from USAs trade domination and military advantage. China is now rising while USA is on the defensive- tariffs are a significant symptom of that.
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thank you for developing this point. I think saying it has already won is an exaggeration, but I see your point. Maybe it's winning in electric cars? For me, almost everything that comes from China is of poor quality, but sometimes I buy it too, depending on what it is. For example, I won't buy electric things anymore!
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Where was your phone/computer made?
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I don't know, but probably in China. But it's not a Chinese brand. That's not all, but usually Chinese brands have lower quality standards.
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