The U.S.-China trade war is intensifying after the White House’s recent executive order that effectively banned China’s telecom giant Huawei from doing business in the U.S.
The fight with Huawei began before Trump. In 2012, the House Intelligence Committee branded Huawei a national security threat and an arm of the Chinese government’s cyberwar against the U.S. The war on Huawei escalated last December when Canadian authorities, at the U.S.’s request, arrested the Huawei CFO on bank and wire fraud charges. She remains in custody.
Huawei denies all wrongdoing and insists it would never steal information from the U.S. and other countries for the Chinese government. But nobody believes them. Major companies like Google (whom Huawei relies on for its phone’s operating system), Qualcomm, Intel, and Microsoft have cut ties with the Chinese company.
The Huawei ban, if it stays in place, will deliver a crippling blow to the company and China’s ambitions of dominating the world’s wireless marketplace. Huawei is as iconic in China as Apple is in America.
You can’t learn from history when you’re so full of yourself you are in the midst of repeating it. It was 1930 when President Harry Truman attempted to defended U.S. farmers by imposing 40 percent tariffs on 20,000 incoming goods. That move is considered to be the primary catalyst for the U.S. economy to shift from a serious recession into the Great Depression. Too busy to study history, President Trump praised himself for a “booming” steel industry. In one of his 13 tweets on Tuesday, May 21, 2019, Trump declared, In one year Tariffs have rebuilt our Steel Industry-it is booming! We placed a 25% Tariff on ‘dumped’ steel from China & other countries, and we now have a big and growing industry. We had to save Steel for our defense and auto industries, both of which are coming back strong!
When we do our homework we can see that the praise is in the tweet, but the devil remains in the details. Domestic steel production in March 2019 was 7.5 percent below where it was after the post-recession rebound in February 2012, still 18 percent below the pre-crisis peak in mid-2008. The mundane facts here is quite contrary to that for which the President is taking credit.
Then there’s that ‘downstream’ impact of Trump’s 25 percent on end-users in multiple industries. The costs for domestic steel consumers have risen by approximately $11.5 billion. And according to the Alliance for American Manufacturing, a D.C. lobby group that advocated for Trump’s action, only about 12,700 new steel industry jobs have been added. None of this is a formula to MAGA, by anyone’s imagination.
These are desperate times. Markets are corrupted by monetary central planning. They’re confused. And the road back is going to be treacherous. Be not surprised to experience a major re-pricing for all financial assets. And thousand-point intraday or day-to-day swings are part of that equation. This is a future that may prove to be more than frightening… for traditional “buy and hold” investors.
As we learned with the 1930 Smoot-Hawley Act, tariffs can backfire on the country that believes it’s a relatively painless way to affect change. By applying 40% tariffs on 20,000 incoming goods to the U.S. to protect our farmers, it may be the singular event that...
In America, we know how to spend but we don’t know how to set aside for the future. It was my pleasure talking to Gabriana from WMAP (World’s Most Amazing People Radio) created by KC Armstrong, producer of The Howard Stern Show! We got the chance to discuss how...
According to me, it’s not about the prediction. It’s all about the preparation. On June 12, 2019, the predictions are suddenly coming in hard and heavy. The headlines read, “America’s CFOs are bracing for a 2020 recession.” Nearly half (48.1%) of chief financial...
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