TRADE WAR BLITZKRIEG

As promised, newly elected PresidentTrump has unleashed a multi-front trade war on both adversaries and allies withrespect to trade imbalances that have made American businesses, particularly themanufacturing sector, uncompetitive.

This unprecedented ferocity of politicaland economic pressure through the weaponization of draconian tariffs is forcingtargeted countries into immediate talks.

Shockingly, despite Trump’s leadershipsstyle during his previous presidential term, and his clearly articulated promisesduring the 2024 presidential campaign, most countries seemed genuinely stunnedby how he has stormed out of the gate with respect to these matters.

Trump has been portrayed as dangerouslyunpredictable. However, domestically and internationally, Trump hasconsistently been forthright with relentless follow-up.

China The Vulnerable

Unlike during his firstadministration, the current trade issues with China favors Trump heavily forthe following reasons:

China is experiencing a brutaldeflationary period. Consumer inflation at almost zero.

China’s $1 trillion trade surplusmakes it overwhelmingly a manufacturing juggernaut. On the other hand, this tradesurplus dominance prevails only if foreign demand is strong. Present-day,foreign demand has slackened considerably resulting in the following domestic challenges:

• ·       Growing manufacturingover-capacity.
• ·       Unpaid government workers becauselocal governments that are drowning in debt.
• ·       High unemployment among youth.
• ·       Soaring housing foreclosures.
• ·       Drop in domestic consumer demandfor goods & services.
• ·       Because of the aforementionedtrends, there is growing civil unrest, higher crime rates and mass killingsvehicular ramming and knife attacks) that are either under-reported orunreported.

In a face-saving attempt to paperover its economic vulnerability, the Chinese government’s recent reportedeconomic growth rate of 5% goes contrary to anecdotal and video observations.Most notably is the surfeit of videos supporting the considerable decline inpassenger traffic on the high-speed rail lines between major cities.

Manufacturing Behemoth LimpingAlong

To provide you a perspective ofChina’s global manufacturing dominance, the following chart entitled China is the World’s ManufacturingSuperpower (2022)provided by the United Nations Statistic Division:

The Big Three

China is among America’s topthree largest importers along with nearby Mexico and Canada. These threecountries comprised about 40% of US total imports in 2023.

The following chart entitled America’s Main Import Partners (in 2023) provided by the USCensus Bureau and the Bureau of Economic Analysis, provides a visual overview ofUS import partners.

SLAUGHTERING SACRED CASH COWS

Domestically, other gargantuanchanges include either the dismantling, overhaul or even controlled implosionof numerous US agencies, of which the USAID is currently in the spotlight.

The Department of GovernmentEfficiency’s (DOGE) objective is exposing decades-worth of waste. It’s a niceway of saying, in the British vernacular, that the billions in funds managed bythese agencies are engaged in activities inconsistent with their missionstatements.

There is strong preliminaryevidence that the budgets of many agencies, funded by US taxpayer monies, havebeen nothing more than the largest money-laundering operation in history toline the pockets of unnamed, unidentified and unknown individuals andorganizations unrelated to the agencies’ official activities for relevantdomestic and foreign public good.

These agencies with a surfeit of irrelevantoddball programs have been politically entrenched and subsequently greatlyexpanded for decades and thrived thanks to politically incestuous leadershipover several administrations.

The DOGE’s investigations and exposurehave enraged the entitled multi-generational leadership and supporters of theseagencies. DOGE is merely staunching financial hemorrhaging by cutting off theirgenerous “allowances”. 

Conclusion & Takeaways

Timing is everything. Trump isleveraging the advantages he has with GOP majority houses and turbo-chargedwith executive orders.

His tactics are the necessary shocktreatment to get long entitled countries out of their moribund practices and tothe negotiation table to discuss and resolve trade issues to reach fair &reasonable agreements.

Just as importantly, theseobjectives are being reached at bullet train velocity. Indeed, Trump breaks economicstalemates, not campaign promises.

For the aforementioned reasons, expectpolitical and economic volatility in the coming months and hopefully thefundamentals are restored to their natural state which reflects reality, notcriminality.

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The CeruleanCouncil is a NYC-based think-tank that provides prescient, beyond-the-horizon,contrarian perspectives and risk assessments on geopolitical dynamics andglobal urban security.